The price of oil options is soaring amid increasing uncertainty about the outlook for prices and indicating a mismatch between strong demand from hedge funds and caution among option sellers. The implied volatility, and therefore cost, of at-the-money one-month Brent options contracts has surged to 53 percent, up from 46 percent at the end of last year and just 34 percent in mid-November. The level of implied vol is now at the 95th percentile for all trading days over the last decade and only consistently exceeded this level during the financial crisis in late 2008 and early 2009 ( tmsnrt.rs/1PiNzG9 ). The gap between implied vol (how much the market expects prices to jump around in future) and actual volatility […]