A huge options bet Tuesday on Brent crude prices plunging rattled oil traders already on high alert for unusual flows, as Iran war headlines continue to whipsaw prices and regulators probe suspicious trading.
Put options equivalent to 134 million barrels of Brent crude oil traded in a single $91/$90 put spread transaction on Tuesday, according to data compiled by Bloomberg. A buyer of the spread would profit as much as $129 million if July futures tumble roughly 19% from their current level by the May 26 expiration.
Though the purpose of the trade remains unclear, call and put spreads with very narrow strike ranges are often hedges for over-the-counter binary, or digital, option trades. Another use could be hedging an event-contract trade on a prediction market such as Kalshi or Polymarket.
Even as the US-Iran conflict drags into its 12th week, traders have consistently priced in the possibility of an abrupt deescalation, including a deal under which Iran reopens the key Strait of Hormuz. The call skew, or premium traders are willing to pay for options betting on a further rally, has shrunk to the smallest level since before the conflict.
Still, the large, hard-to explain volumes raised eyebrows in a market already on edge. Multiple instances of well-timed oil trades ahead of proclamations or social media posts by President Donald Trump have sparked market-wide speculation and even prompted a Department of Justice probe. Even as firm evidence remains elusive, traders surveyed by Bloomberg report declining confidence in the oil market’s integrity, compounding risk-off sentiment in an already volatile geopolitical environment.
Later in the session, 30 million barrels of July $92/$90 put spreads also traded on ICE, along with another 26 million barrels of the same spread on a similar contract on CME Group.
With assistance from Alex Longley.
This article was generated from an automated news agency feed without modifications to text.
