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Brent bulls and bears play options tug-of-war
July 7, 2017 / 1:37 AM / 4 months ago

Brent bulls and bears play options tug-of-war

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.

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

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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