Mandy Xu

"We continue to see very strong upside demand in call -- on oil... It's very rare historically to see longer dated options and we see skew is inverted... The options market in oil telling you this crisis is not a temporary crisis." The options market is pricing in a sustained, multi-month geopolitical conflict in the Middle East that will keep oil prices elevated. This contradicts the broader equity market, which is currently brushing off the headlines and assuming a quick de-escalation. LONG. The structural setup in the options market indicates smart money is aggressively hedging against a prolonged oil supply shock. A sudden diplomatic breakthrough or definitive de-escalation between the US, Israel, and Iran would cause a sharp drop in crude prices.

"We continue to see very strong upside demand in call -- on oil... It's very rare historically to see longer dated options and we see skew is inverted... The options market in oil telling you this crisis is not a temporary crisis." The options market is pricing in a sustained, multi-month geopolitical conflict in the Middle East that will keep oil prices elevated. This contradicts the broader equity market, which is currently brushing off the headlines and assuming a quick de-escalation. LONG. The structural setup in the options market indicates smart money is aggressively hedging against a prolonged oil supply shock. A sudden diplomatic breakthrough or definitive de-escalation between the US, Israel, and Iran would cause a sharp drop in crude prices.