When you have options, volatility is your friend
The jumpier prices are, the more valuable is a right to buy or sell
IMAGINE THAT, by some twist of fate, you become the ruler of an oil-rich state. A crash in the oil price has left a hole in its budget. You are forced to consider selling the kingdom’s assets. Among them is a mothballed oilfield in a remote part of the country—so remote that it costs $90 to retrieve each barrel of oil. That is above the prevailing price of $70 a barrel. Even so, you are advised to try to sell a licence to operate the field.
This article appeared in the Finance & economics section of the print edition under the headline “The rub of the VIX”
Finance & economics May 11th 2019
- America ratchets up the pressure in its trade war with China
- So far, Donald Trump’s trade war has not derailed the global economy
- The EU tries to strong-arm Switzerland into a new trade deal
- Months after IL&FS collapsed, India’s markets are on a strong run
- Mobile money comes to Nigeria
- New research traces the intricate links between policy and politics
- When you have options, volatility is your friend
- The state of America’s community banks
From the May 11th 2019 edition
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Could war in the Gulf push oil to $100 a barrel?
Missiles are flying over a region that supplies a third of the world’s crude
How bond investors soured on France
They now regard the euro zone’s second-largest economy as riskier than Spain
Can Andrea Orcel, Europe’s star banker, create a super-bank?
An interview with the boss of UniCredit
Why economic warfare nearly always misses its target
There is no such thing as a strategic commodity
A tonne of public debt is never made public
New research suggests governments routinely hide their borrowing
Xi Jinping’s belated stimulus has reset the mood in Chinese markets
But can the buying frenzy last?