Confidential email chain discussing oil options and geopolitical market outlook (2014)

From: Paul Morris [| —_—_—_—_—_—acaT | Sent: 3/14/2014 10:27:39 PM To: Jeffrey Epstein [jeevacation@gmail.com] Subject: Re: Oil options [C] Attachments: graycol.gif Importance: — High Classification: Confidential I do want to talk to u about this, they spent too much thinking about options here, let me know when u have couple minutes. Vinit Sahni ano Original Message ----- From: Vinit Sahni Sent: 03/13/2014 09:47 PM EDT To: jeevacation@gmail.com Ce: Paul Morris Subject: Fw: Oil options Classification: External Communication Jeffrey - apologise if this long to execute next time we'll be much quicker. Nav Gupta ano Original Message ----- From: Nav Gupta Sent: 03/12/2014 09:35 PM GDT To: "jeevacation@gmail.com" <jeevacation@gmail.com> Ce: Tazia Smith; Paul Morris/db/ I; Vinit Sahni/db/ Subject: Oil options Jeffrey Just got off the phone with Vinit. DB stopped marketmaking OTC oil options - for short dated I'd go for exch traded - better liquidity and lower transaction costs in and out. My central scenario - Kerry Lavrov meeting Friday will be a bust and the Crimea referendum this weekend will result in "yes" given the 59pct ethic Russian makeup. Sunday/ Monday sanction rhetoric from ranging from g8 expulsion to Iran-style bank embargo is raised a notch. Russia follows with more threats of counter-sanctions. My sense is the Obama 5m of 696m SPR release is to show Merkel and co he will step in. He needs to because there are 8 small European and Baltic countries that rec 70%+ of their gas from Russia. Germany gets 30%. Cross asset correlations outside of the US are increasing past few days - eg copper and the Turkish lira hourly charts are on top of each other past 4 days. I'm worried there is a 30-40pct(?) chance of a hard risk off move in markets in first half of next week - more focused on European equities, copper, EM FX (Turkey, ZAR, Ruble etc) than SPX. In that scenario oil is way up. Exchange WTI calls - there are 2 options (as of 3pm est): 5day expiry 17march 2014 underlying clj4 97.92 and 35d expiry 16april2014 underlying clk4 97.59 ** The 5 day options are a bit short - one possibility is sell a 3usd out of the money put (95.5 strike) for 20cents and buy a 2usd OTM 100 call for 25. Net pay 5cents. But 5d is a bit short for me. **For 35d expiry You could look at selling 91.50 (6usd OTM put) for 56cents and buying 103c¢ (5.5usd OTM) for 58cents or the 102c (4.5usd OTM) for 76cents. CL1 <comdty> OMON on Bloomberg has live strikes and bid/ask. HOUSE_OVERSIGHT_022346