CO2 Traders Hedging Against Climate Laws, RNK Says (Update1) - Bloomberg.com

A simple rule: "In times of uncertainty, options (calls or puts due to Put call parity) have more value".

A case in point:

CO2 Traders Hedging Against Climate Laws, RNK Says (Update1) - Bloomberg.com:

"Ken Schneider, an options trader at New York-based environmental hedge fund RNK, said investors are buying put options on speculation there will be new restrictions on United Nations’ Certified Emission Reduction credits. Polluters can now use the UN’s so-called offset credits from projects in less- developed nations to meet European Union requirements to reduce carbon dioxide emissions. Restrictions on their use may slash their value.

“The Certified Emission Reductions are a keg of dynamite in a matchstick factory,” Schneider....

and later:

..."buyers paid about 3.25 euros ($4.57) a ton last week for 5 million tons of 2012 Certified Emission Reduction puts with a strike price of 10 euros a ton, according to data from the European Climate Exchange in London. Today’s closing price for 2012 CERs was 12.43 euros a ton, up 2.1 percent compared with June 26."