WTI $80-band contract offers 100,000% IY as deep OTM put on oil crash
Y1 (WTI settlement between $80.00 and a ceiling) prices at 6¢ with 100,000% implied yield over 6 days — a $15.7 CRI. With WTI at $123.75, this is deeply out-of-the-money and functions as a pure tail-risk hedge or lottery. The 6¢ price implies the market assigns near-zero probability to a $40+ crude collapse in 6 days. Sell this if you're long crude momentum; buy as 1% portfolio insurance against a black-swan Hormuz de-escalation.
WTI surging to $123.75 (+3.7% today) on Strait of Hormuz fears is a regime-level supply shock that cascades into gas prices, inflation prints, and Fed optionality. Brent above $70.99 is now priced at 86¢ (R3) but gas above $4.30 sits at only 24¢ (R2) — a structural contagion lag between crude and pump prices that historically closes within 3-4 weeks. We buy the lag and sell the overextended crude contract.
CatalystSurprise Hormuz de-escalation announcement; emergency OPEC+ production surge
RiskOil does not crash; 6¢ premium is lost entirely — maximum loss is entry price
WatchWTI settlement in the $80-band by July 25, 2026 (Y1) resolves YES only on black-swan scenario · by 2026-07-25
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