Trade Idea: Sell Mar Brent Strangle

This week, Onyx Research Analyst Pierre-Elie Balsan recommends trading options.

Brent futures have strengthened off the back of heightened geopolitical risk in the Middle East and Houthi attacks on global shipping in the Red Sea that have deterred even more vessels from the Suez Canal route.

Considering the fundamental situation and observing the consequent flows, Onyx research has estimated the volatility using the Garman Klass metric, in which they’ve noted a higher realised volatility that’s still well-contained within a range.

Thus, they recommend selling a Mar Brent strangle, which would comprise of going short a call option with a higher strike price and going short a put option with a lower strike price. This would collect the risk premium that has risen amid the rally in implied volatility.