Crude oil futures markets: Another look into traders' positions

Abstract

We investigate the traders' futures-only positions, options-only positions and futures-and-options-combined positions in crude oil to draw some implications with respect to the behavior of traders during the 2008 oil bubble. We find that: (iv) the Money Manager group primarily speculated in crude oil markets via options on crude oil futures; (v) the Swap Dealer group generally behaved as a typical institutional long-only investor in crude oil-they were long crude oil futures and hedged with the long protective put options on crude oil futures; (vi) the Producer/Merchant/Processor/User group, in addition to being a short hedger, possibly acted as a counterparty in crude oil options markets; (vii) Other Reportable traders possibly engaged in the protective call risk management strategy; and (viii) the Non-Reportable traders group actually showed the most sophisticated, almost neutral, hedged position in crude oil futures and options on crude oil futures. © 2014 Macmillan Publishers Ltd.