The ceasefire agreement breakdown has impacted the market! Brent oil breaks through the key option exercise price area, and the uptrend may continue further.

After President Trump announced that the US-Iran ceasefire agreement "is over", the situation in the Middle East has escalated once again, causing a significant surge in international oil prices on Wednesday. At the same time, Brent crude futures broke through the key option exercise price area, with market analysts believing that a large number of option positions may further amplify oil price volatility and sustain the uptrend. On Wednesday, Brent crude futures for September delivery surged by 8.3% at one point, reaching $80.30 per barrel, crossing the $80 mark once again. Data shows that there are over 50,000 call and put options near the $80 execution price for September Brent crude, corresponding to around 50 million barrels of crude oil; near the $85 execution price, there are approximately 75,000 open contracts. In addition, October Brent crude also has a similar scale of open positions near the $80 execution price, with the October contract price around $0.75 lower than the September contract. Market participants point out that when oil prices break through key levels where a significant number of options are concentrated, market makers who have sold options may need to continue buying crude oil futures for risk hedging to maintain position balance. This trading mechanism, known as "negative Gamma", may further amplify the extent of price increases; conversely, when oil prices fall, market makers may sell futures, exacerbating the downturn. However, analysts also caution that it is currently unclear in which direction market makers may have net positions at the relevant execution prices. If market clients have predominantly sold options prior, then market makers' hedging operations may actually dampen market volatility. It is worth noting that on Tuesday, there was a large-scale call option trade, with over 25,000 contracts of a October $110/$150 call spread being executed. Such strategies are typically used to bet on a significant increase in oil prices, indicating that some investors are hedging against further escalation in the Middle East situation and a surge in oil prices. Analysts believe that against the backdrop of continuously escalating geopolitical risks, if Brent crude continues to break through key levels such as $80 and $85, a large number of open option positions may further amplify market volatility. Short-term international oil price trends will continue to be influenced by geopolitical news and the flow of funds in the options market.