Traders who bet on the rising oil prices with record speed are being brutally awakened by the harsh reality: most of these contracts are now worthless.

Israel launched the long-awaited bombing against OPEC member country Iran over the weekend, but did not hit Iran's energy infrastructure, causing a sharp drop in crude oil prices.

This sharp drop led to about 0.8 million Brent crude oil call options for December becoming unprofitable on Monday, as traders lost the urge to prevent price surges. Most of the trading around the Middle East conflict risk this month has occurred in the options market, where the volatility of options has exceeded that of futures.

Due to speculation that the attack could disrupt the oil flow in the region, which accounts for about a third of the world's oil production, investors holding Brent crude oil options reached a historic high total. Less than 10% of the contracts expiring on Monday were valuable. This means that since earlier this month when Iran attacked Israel (prompting Israel to threaten retaliation), approximately 32 million barrels of call options with strike prices of $90 and $100 have effectively gone to waste.

Last Friday, nearly 22 million barrels of call options at $75 were worth about $35 million, while at that time nearly 53 million barrels of call options at $80 were worth about $22 million. Both call options were worthless when expiring on Monday.

Energy expert Scott Shelton from TP ICAP Group Plc said: "In my view, the Middle East remains a powder keg, but the urgency of being bullish on oil may have passed."

It is certain that not all hedging measures against price surges have expired. There are around 0.13 million unexpired Brent crude oil call options at $100 for the first six futures months next year, an increase of about 70% compared to the end of September.

Some traders use options as a way to hedge their actual operational risks (such as crude oil production or consumption), while others use options as a relatively inexpensive way to bet on price movements or volatility.

Traders also made a final effort to cash out their put bets before expiration, with over 20 million barrels of $70 December put options changing hands on Monday. This helps reduce the premium deviation between call and put options (i.e., the premium of call options relative to put options) to the lowest level in almost a month. The indicator surged to the highest levels in over two years this month.

Sheldon said: "As geopolitical risks keep the bear market at bay, the market is not as bearish as imagined. They need to get involved, which means that any significant rebound will be sold off."