As West Texas Intermediate (WTI) oil price crashed below zero on Monday, some investors bought call options on hopes that the unprecedented rout could be followed by a medium-term bounce.
The United States Oil Fund LP, the largest U.S. crude exchange-traded fund, traded 3.5 million options contract on Monday, of which around two-thirds contracts were of call options – bullish wagers used to protect against upside moves, according to Reuters.
Notably, the biggest individual trade was a purchase of 18,514 July calls for 6 cents each that could be exercised, or redeemed for USO shares if the fund rises above $8. As of Monday, the fund value was $3.75.
While trading volumes in call options spiked on Monday, the implied volatility for put options or bearish bets was still higher than that for calls.
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