The rising energy price boom in 2021 is far from over, and the trading volume of crude oil call options has surged recently.
After Wall Street traders bet on Brent oil prices rising to $100 in June, traders are again betting on $100/barrel crude oil call options. WTI crude oil prices have risen 10% this month and are up 70% this year, but prices have not touched $100 since the oil crash in 2014.
At the same time, traders in European countries are betting bigger. According to QuikStrike data, some traders believe that Brent crude oil will reach a historical high of $200 per barrel in December 2022.
Previously, Wall Street News mentioned that regarding the oil price issue that has attracted much attention due to the recent surge, Putin believes that oil prices are likely to hit US$100 per barrel. Goldman Sachs and many other investment banks believe that oil prices are likely to remain at high levels in the next few years.
Supply chain disruptions and natural gas shortages continue to drive energy prices higher, however global economic expansion is slowing and rising oil and gas prices could dampen consumer spending. The crazy betting by oil price bulls is tantamount to a gamble, and the potential for quick profits from early small investments and options trading is attracting more investors to join this gamble.
One sign of the frenzy in crude oil options trading: Expected volatility, a measure of volatility traders expect for an asset at a given time, has risen in recent weeks as prices have risen, upending A relationship in which rising prices lead to lower volatility and vice versa. Traders said it was a sign that with so many traders flooding into the crude oil market, greater volatility is almost inevitable.
Flashpoint Energy partner John Gretzinger is a long-term oil options trader. He believes that the current crude oil options market is close to crazy.
Data from the Chicago Board of Trade shows that an average of 167,000 WTI contracts were traded every day in October, the most since March 2020. QuikStrike said the $100 call option is currently the most traded option in the WTI energy market. Traders said this was unusual and was often caused by a funding gap or higher than existing oil production.
In addition, Wall Street is watching whether soaring energy prices will affect third-quarter corporate earnings. Delta Air Lines warned investors on Wednesday that it expects rising fuel prices to dent fourth-quarter profits. Earnings reports from airlines including United Airlines Holdings Inc. and American Airlines Group Inc. are also expected to further highlight the issue in the coming days. </p
