July 7, 2017 / 1:37 AM / a month ago

Brent bulls and bears play options tug-of-war

A car is filled with gasoline at a gas station pump in Carlsbad, California August 4, 2015.Mike Blake

LONDON (Reuters) - The Brent crude oil options market is showing a definite split between the optimists and the pessimists this week, but it would seem the bulls are starting to gain the upper hand.

The benchmark September Brent futures contract has risen by around 1.3 percent so far this week and on Thursday was up 66 cents on the day at $48.45 a barrel, having fallen from a one-month high of $49.90 a barrel on Tuesday.

The most-actively traded options for September so far this week have been upside calls at $55 a barrel and downside puts at $45. Both contracts have seen around 12,000 lots change hands since last Thursday, based on Reuters data.

Calls give their owner the right to buy Brent crude futures at a set price, by a certain date, while puts give the holder the right to sell them.

Implied volatility, one gauge of how much in demand a particular option is, has shot up on $55 calls to nearly 34 percent, the highest since September became the front-month options contract, while vol on $45 puts has risen to 31.3 percent, from below 30 percent last week.

September Brent options expire on July 28.

Looking further ahead, the December options strip shows a decidedly more bullish picture. The most-actively traded options are calls at $55 and $70, although volumes are a lot smaller than those for the most-traded September options.

December $55 calls have seen 2,875 lots change hands since last Thursday, while $70 calls have seen 2,871 lots in volume.

(To view a graphic on most-actively traded Brent crude options this week, click reut.rs/2tUqMBp)

(To view a graphic on September Brent crude options open interest, click reut.rs/2utoaHM)

(To view the Brent crude options heatmap, click reut.rs/2tk4lnJ)

Reporting by Amanda Cooper; Editing by Susan Thomas

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