As Ilia Bouchouev explains in Virtual Barrels, selling oil options may look like a classic insurance business. Volatility is high, premiums are attractive, and demand is constant. Yet unhedged option selling in oil has historically produced unstable results. Selling crude straddles without managing exposure generates smooth profits punctuated by occasional losses large enough to erase them. The reason is simple: oil options are not meant to be held passively. Their risk changes continuously as price moves. ...