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HO Options May Ease ULSD Buyer Fears Over Winter Price Spikes

…OPIS on Thursday asked Elaine Levin, president of Powerhouse brokerage, to look at some HO options.

While the HO term has its legacy in heating oil, it applies to the ULSD specification for New York delivery and is an imperfect but appropriate “insurance” for marketers and end-users worried about a winter price spike.

Levin said she is seeing some interest in $5/gal options. An outright $5/gal call, each of which represents the right, though not the obligation, to take delivery of 42,000 gal of ULSD, carried a cost of 17.5/cts/gal on Thursday morning, or roughly $7,350.

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