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Market Chatter: Large Brent Crude Options Bet Raises Trader Eyebrows After Suspicious Trades

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Traders have expressed suspicion over a huge options bet made on Tuesday on Brent crude prices, Bloomberg reported, with the finance industry now more sensitized to unusual trades amid signs of suspicious market behavior.

Put options that equate to 134 million barrels of Brent crude were traded in one spread transaction, Bloomberg data showed. A buyer of the spread could make $129 million if July futures contracts fall 19% from current levels by their May expiration.

The news agency said that very narrow strike ranges in call and put spreads are typically hedges for binary or digital option trades. Another possibility is that the trade was a hedge for an event-contract trade on a prediction market, the article said.

It noted that the call skew or the premium that traders are ready to pay now for options is now at its smallest since before the conflict.

The size of Tuesday's transaction was noted by a market now jittery over unexplained large bets after revelations of a pattern of large trades just ahead of social media announcements by US President Donald Trump regarding the Iran war.

That has also led to an investigation by the US Department of Justice. Traders told Bloomberg this had diminished their confidence in the integrity of the oil market.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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