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Mexico's new president will probably keep its secretive billion-dollar oil hedge going

Posted On: Jul 12, 2018   |   Posted By: Business Insider

Mexico's new president will probably keep its secretive billion-dollar oil hedge going

REUTERS/Henry Romero
Mexico buys put options from US financial institutions on oil.
A change in government may see that hedge out soon.
Ultimately, it looks as if the hedging strategy will remain in place.
The Mexican oil hedge, or the Hacienda Hedge , is considered the biggest hedging bet on Wall Street as well as perhaps the most secretive. It has earned Mexico-and a few large investment banks-billions of U.S. dollars.
Mexico buys put options from investment banks and typically hedges a whopping 200-300 million barrels of oil a year. With the put options, it has the right, but not the obligation, to sell oil at a previously set price and timing. But will this tradition continue under the newly elected administration? See the rest of the story at Business Insider NOW WATCH: What happens when you hold in your pee for too long See Also: GOLDMAN SACHS: The trade war won't stop oil prices from rising An oil buyers club is threatening OPEC's dominance A storm is brewing for US oil exports SEE ALSO: Amazon is...

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