Options Traders Are Betting On $300 Oil

• Options traders traded the equivalent of 5 million barrels of Brent at $250 and $300 call options
• The resurgent activity with bets on $100 or $200 oil shows that more traders are getting into the energy market amid the global energy crunch

Adventurous options traders placed bets this week on oil prices hitting $250 and even $300 per barrel, betting for the first time this year that oil could exceed $250, ICE Futures Europe data cited by Bloomberg showed.

On Thursday, options traders traded the equivalent of 5 million barrels of Brent at $250 and $300 call options.

Call options give traders the right—but not the obligation—to buy assets at a certain price, the so-called strike price, by a certain date. 

The amounts of call options at triple-digit strikes have soared in recent weeks, suggesting that more speculative traders are attracted by potential quick profits from options trades, which are relatively low-cost ways to speculate on the direction of an asset.

While $250 per barrel bets are the first call options traded this year, some traders have already bet on $200 and $215 oil in recent weeks, according to Bloomberg data.

Last month, exchange trade data showed that as oil prices hit multi-year highs, some speculative traders were betting on the options market that oil could exceed $100 a barrel by the end of this year and even reach a record $200 per barrel by the end of 2022. 

The resurgent activity with bets on $100 or $200 oil shows that more traders are getting into the energy market amid the global energy crunch, and more of those speculators are bullish on oil prices.

$100 a barrel oil is no longer an outrageous bet, as it was at the start of this year, and even some investment banks believe that crude prices could hit the triple digits as soon as in the middle of next year.

Most recently, Bank of America said that Brent Crude prices could rise to as much as $120 per barrel in the first half of 2022 due to the global gas crisis, booming air travel with international flights returning, and a comeback of Asian demand.

By Tsvetana Paraskova for Oilprice.com

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