The recent pullback in crude has made call options on U.S. oil an attractive hedge against continued geopolitical and inflation risks that could push prices higher, according to Goldman Sachs.
The investment bank recommends buying a $71 United States Oil ETF call for April 2024 to profit from a jump in prices.
Investors would see an estimated return of 90% if WTI hits $88 a barrel by April, according to Goldman.
The implied volatility in oil prices rose significantly in October due to the Israel-Hamas war, but option prices have since fallen and are now below the 1-year average.
For equity investors, call options on S & P Oil & Gas , Energy Select Sector SPDR , Occidental and ConocoPhillips are the most attractive ahead of the OPEC meeting, according to Goldman.
Persons:
Goldman Sachs, Goldman, Arun Prakash
Organizations:
West Texas, United States Oil, . Oil Fund ETF, P Oil & Gas, Energy, ConocoPhillips
Locations:
Israel, Occidental