Last January in a post titled A Crude Oil Hedging Lesson From Mattress Mack - $85 and It's Free, we highlighted Gallery Furniture's "Biggest promotion in Gallery Furniture history". To those of you whom have forgotten about the details of their promotion or never saw it in the first place, here was their pitch:

Everyone knows how important oil is to the Houston area economy. Everyone from construction to retail depends on how well the energy industry prospers. The better energy does, the better we all benefit.

Mattress Mack wants to do his part to boost our local economy by giving away Free Furniture to customers if the price of West Texas Intermediate Crude tops $85 per barrel at year's end. That's right, if you purchase $7,000 or more of furniture or mattresses from Gallery Furniture, Mack will give you back 100% of your purchase amount if oil prices go up!

If you've followed Mack's previous promotions over past year or so, you know customers always win. This could be your chance to win free furniture! The good news is that if you win, so does the entire Houston economy.

Given that NYMEX WTI futures ended the year trading in the $30's, Mack's "short $85 call option" clearly settled-out-of-the-money and if a few folks bought $7,000 or more in furniture then the company made a little money thanks to the promotion. Their customers that we're hoping for the payoff obviously didn't receive one. 

Now that WTI is trading near $30/BBL, perhaps it's high time for Mack or one of his competitors to roll out a similar promotion, albeit with a strike price which is more in line with the current forward curve? Say something along the lines of $45 or $50 per BBL? As of today the offer on a $45 February '17 WTI (February '17 would be the prompt option month for WTI on December 31, 2016) call option would be about $5/BBL. If "The good news is that if you win, so does the entire Houston economy" was true a year ago, surely it would be much more so if WTI settles above $45 at the end of 2016.