(Bloomberg) -- Oil options traders are increasingly looking to protect against rising crude prices as tensions escalate in the Middle East.
Near-term market gauges for Brent and US crude have flipped over the past week to reflect more demand for bullish call options than bearish puts. The WTI second-month call skew, which shows what traders will pay for options that profit from a rise in prices versus a decline, switched on Tuesday for the first time since November, according to data compiled by Bloomberg. Oil options markets typically skew bearish as producers seek to protect against price drops.
Oil prices surged above $85 this week as tensions ratchet higher in the Middle East, with Iran vowing revenge on Israel for an airstrike on its embassy in Syria that killed a top military commander.
The market's flip to the call skew underscores the magnitude of bullish sentiment for crude, which has rallied 18% this year. US oil is trading at the highest since October, while physical markets are also seeing traders pay a premium for near-term barrels.
--With assistance from David Marino.
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