Zinc bears are betting that the London Metal Exchange zinc price will fall to $2,500 per tonne in June, with massive orders for put options placed in recent weeks, Fastmarkets learned.
Current open interest on the LME Select platform shows 5,125 lots of put options are active for the June declaration at a $2,500-per-tonne strike price, representing an equivalent of 128,125 tonnes of the metal. Options give the right to buy via 'calls' or sell via 'puts' at a certain strike-price level.The options trades, which would need an 11.6% drop in LME cash prices from the current level at $2,830 per tonne to activate, come at a time when the zinc market is approaching a turning point in terms of physical supply and demand as well as record tightness in forward price spreads. "There's been a big move in the options space over the last few weeks, at the end of March we saw this sudden repricing where the puts gained a lot,"...