Options on United States Oil Fund (NYSEArca:USO) Hit Record Volume

Oil and retail stocks were the big focus in the options market as chaos in Libya and pricier energy weighed on sentiment and helped the volatility index reach a 2011 high.

Options on the United States Oil (NYSEArca:USO) fund surged to record volume as light, sweet crude for April delivery, touched $100 a barrel for the first time in more than two years. Options traders grappling for hedges and inexpensive exposure to oil favored bullish "calls" that profit with further gains. Calls convey the right to buy shares later at a set price.

"It's all related to the squeeze at the pump," Oppenheimer & Co. chief options strategist Michael Schwartz said of Wednesday's action in energy options. The United States Oil fund added $1.31, or 3.4%, to $39.80 as worries of supply disruptions mounted.

About 332,000 bullish calls to buy the oil fund changed hands, versus 166,000 bearish "puts" to sell, according to data from options analytics firm Trade Alert. The activity was nearly four times the recent daily volume. Puts convey the right to sell shares at a later date.




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