Carbon Traders Speculating on 50 Euros a Ton in 2012, CarbonDesk Says

Options to buy European Union carbon permits for 2012 traded in London yesterday at a strike price of as much as 50 euros a metric ton, according to CarbonDesk Ltd.

Some 1,000 lots of call options, which give the right to buy permits at a given price, traded at 50 euros ($64), 2,000 lots at 40 euros and 1,000 lots at 30 euros, London-based CarbonDesk said today in a research note.

Investors may have used a butterfly strategy, the research note said. A butterfly spread combines three options with the same expiration date and different strike prices, with half of the contracts bought or sold at the middle strike price and the rest divided among the top and bottom. The butterfly takes its name from the strategy’s payout diagram, which resemble the insect’s outstretched wings.