Crude Oil All Over Again?
Crude oil is back in the news. As I wrote a few weeks ago, the tales of crude oil supply doom and gloom never really panned out. As a result, since last May oil has been sliding lower in both price and implied volatility. When gasoline returned to more normal price levels, crude oil faded from the news.
That is, until the end of last week, when the shaky ceasefire began to unravel and the threat of a renewed Strait of Hormuz closure or blockade suddenly became very real.
Hostilities intensified last weekend, and oil reacted accordingly, up 16.1% from its lows reached on July 1st and a whopping 9.6% on Monday alone (the largest single-day movement since 05/05/2020). At the same time, Brent’s implied volatility has increased 25.2 percentage points from the low at the beginning of the month and stood at 59.2% (30-day, P/C average) as of Monday’s close. It hasn’t been this high since the end of May. Apparently the oil market misjudged the probability of renewed fighting.
Despite the latest increase in implied volatility, it still seems relatively low when compared to the previous period of unlimited hostilities last March. When viewed in that context, Brent IV seems to be a bargain:
Source: OptionMetrics
Strategy
And speaking of topics that refuse to die, there is Strategy (MSTR), the original Digital Asset Treasury (DAT) company that was all the rage in 2024 and 2025. After peaking at $434.58 in July 2025, it closed last Friday at $94.64, down over 78%. It’s not hard to figure out why—during the same period, Strategy’s main (and only) asset, bitcoin, was down almost 46%.
In late June came a shock: after years of sermonizing to the true believers about never selling bitcoin, Strategy disclosed in June that it had sold 32 bitcoin for roughly $2.5 million, its first sale since 2022 and part of the company’s new Digital Credit Capital Framework. Although some true believers regarded this as treason, it was widely viewed as a prudent and responsible move to help shore up and rationalize Strategy’s capital structure.
Is MSTR going to rally? Many buy low/sell high advocates think it will. But regardless of all the analysis surrounding Strategy’s innovative business model and debt structure (a mixture of convertibles and preferred stock), MSTR’s future boils down to just one factor: the price of bitcoin. It is the company’s only asset, and it currently holds about 4% of the total circulating supply. As you would expect, in general its correlation to BTC varies between 0.75 and 0.85. Essentially, Strategy is a leveraged play on bitcoin. As such, it presents a simple choice: if you are still bullish on bitcoin, and crypto in general, then MSTR could be attractive at its current valuation and NAV; if you are skeptical of bitcoin’s future or believe that you don’t need the leverage and added complexity that Strategy brings, then move on.
If you’re thinking about MSTR options, they aren’t cheap. Currently trading at 89.3%, they are over 16 percentage points higher than their 2026 median.
Source: OptionMetrics