Bloomberg: oil traders hedge against recession with record options bets

The oil options markets broke out of a months-long stupor last week after OPEC+ increased production amid a global economic downturn. As a result, oil prices plummeted to a four-year low, Bloomberg reports.

According to experts interviewed by the agency, this development ended the period of weak price fluctuations. Market participants are now rushing to take profits from existing bearish positions and hedge against economic instability.

On Friday, over 450,000 bearish Brent oil options changed hands, more than double the previous record. Among these were contracts that would profit if the price of this global benchmark falls to $50 per barrel.

The scale of the moves also impacted options pricing. Bearish Brent contracts traded at their largest premium to bullish ones since November 2023, and implied volatility reached its highest level in recent months.

These surges occurred as oil prices fell below $65. According to Bloomberg, the number of put positions for next year represents approximately 118 million barrels.