Rising Geopolitical Tensions Shift Oil Options Markets

Options traders are seeking protection against rising crude prices amid escalating tensions in the Middle East. Near-term market gauges for Brent and US crude indicate increasing demand for bullish call options over bearish puts. The WTI second-month call skew, which illustrates the price traders are willing to pay for options profiting from price increases, switched on Tuesday for the first time since November. This shift is noted as geopolitical risks rise in the Middle East. Traditionally, oil options markets skew bearish as producers aim to protect against price drops. The recent shift in options trading dynamics reflects the impact of heightened geopolitical tensions on the oil market.