Investors are rushing to hedge oil bets after Delta variant jitters gave crude its biggest drop this year

SourceBusiness Insider
SectorOil & Gas
CountryGulf

Oil took a beating during , leading investors to hedge their bets despite the prevailing bullish sentiment, according to a . The sell-off, widely attributed to mounting concerns over the Delta variant, sparked oil’s biggest drop this year, pushing oil futures down as much as 8.6%. As oil plunged, briefly falling below $66, oil investors piled into put options to protect against further price declines.

Some particularly prescient traders had already hedged their position before Monday’s turmoil. Early last week, put options with a $66 strike price saw massive trading activity, Bob Yawger, director of energy futures at Mizuho Securities, told the Journal. “Whoever it was is getting the old pat on the back today from their boss,” added Yawger. Implied volatility, a proxy for market expectations of future price action, surged to 41.2% on Monday, according to QuikStrike data cited by the Journal. Yet analysts still expect oil to climb in the coming months, arguing that fundamental supply and...read more...