NY energy fund Blueshift shuts; big options trades eyed: sources

NEW YORK/HOUSTON (Reuters) - Blueshift Capital Group LP, a New York-based hedge fund focused on energy volatility, is liquidating its assets and closing, according to four sources familiar with the matter.

The 2-year-old fund, which earlier this year had some $170 million under management, closed several weeks ago, but it only drew notice this week following a series exceptionally large Brent options trades that some market sources said appeared consistent with winding down a large loss-making position.

It was not clear how much of Blueshift's positions had been liquidated or transferred, and it could not be determined if Wednesday's options trades on the Intercontinental Exchange were related to the fund itself. Some brokers said that a second energy fund was rumored to have liquidated as well.

A company representative declined to comment.

Late on Wednesday, total of 144,000 lots traded of Brent June 2016 call options that are equivalent to 144 million barrels of crude, raising eyebrows across the market.

The deals made up 98 percent of the options volumes in that contract and some 65 percent of total Brent options volumes on Wednesday, according ICE data. They included nearly 29,000 lots in $95 calls, 19,000 lots in $105 calls, 59,000 lots in $110 calls and 37,000 lots in $120 calls.

With oil prices trading at around $50 a barrel on Wednesday, the options were worth as little as 4 cents per lot, having plunged from 23 cents two months prior.

One market expert said that the trades were likely buying back of a previous short call position. A call option gives the holder the right and not an obligation to buy an asset at a certain price.

"There's a lot of risk involved (in a short call) because if the market rallies, things would get a lot more expensive," said John Saucer, vice president of research and analysis at Mobius Risk Group in Houston.

Meanwhile, crude oil volatility <.ovx> has moved quickly, trading as high as 64.4 percent in February down to 28.8 percent in June.

Blueshift Capital opened in 2013 and is led by Todd Kramer and Tina Lindstrom. Kramer was previously a trader at Prime International LLC, a Chicago-based proprietary trading firm, according to his LinkedIn profile. Lindstrom previously spent 11 years at Susquehanna International Group.

Blueshift lost more than 8 percent in February, its biggest-ever monthly loss, after oil markets rebounded from heavy falls, the Wall Street Journal reported in March.

(Reporting by Catherine Ngai in New York and Liz Hampton in Houston; Editing by Jonathan Leff and Lisa Shumaker)