Oil traders piled into more than 3 million barrels worth of options contracts in a bet that prices would spike to $250 a barrel by June as geopolitical risks remain elevated.
Oil traders have invested heavily in options contracts, accumulating more than 3 million barrels' worth, betting that prices could surge to $250 a barrel by June due to ongoing geopolitical risks.
Data compiled by Bloomberg shows that around 3,000 lots of June $250 call options in US crude were traded for a penny each on Tuesday. This move is likely a speculative gamble, akin to a "lottery ticket," that could yield significant returns if prices skyrocket to unprecedented levels by mid-June. However, the trade also included $25 put options, which some traders and brokers suggest may indicate a broader macroeconomic strategy.
The volume of bullish oil options has reached a record high, causing the premium for calls over puts to surge this week to its highest level since October. This trend comes as Israel pledges to retaliate following Iran's recent missile and drone attacks, raising concerns about a potential escalation of the conflict.
US crude futures have climbed above $85, while Brent is hovering around $90, driven by fears of a widening conflict amid tight supplies and strong demand.
