Hedge Funds Pile Into Once-Esoteric Commodity Curve Option Bets

Wall Street investors looking for a better way to bet on an oil glut or a frigid winter are piling into a suddenly booming corner of the options market that was long the province of physical commodity traders.

Calendar spread options — which bet on the difference between contracts expiring in different months — have seen a surge in trading to record levels in some markets. Positions in West Texas Intermediate crude have more than tripled over the past year, while Dutch natural gas curve bets have grown nearly as much.