After going well bid during the Monday......>

OPTIONS: After going well bid during the Monday session, DMFX short-end implied

vols have edged lower Tuesday morning, but generally hold close to recent highs.

GBP/USD vols remain a highlight, with the vol term structure highly elevated

across the 2-6m sector, inverting the curve as contracts look to capture Brexit

risk surrounding the October 31st deadline. The pattern is repeated across EMFX

vols so far Tuesday, although USD/TRY and USD/CNY standout as gainers.

-Options volumes humming along relatively well, but just under recent averages

for this time of day. USD/JPY, EUR/USD and USD/CNY options sit at, or ahead of,

average, with GBP/USD and AUD/USD hedging lagging behind.

-Despite the moderation in spot markets today, risk sentiment still looks

slightly sour, with USD/JPY puts in strong demand (put notional outnumbers calls

today by over 2 to 1). Vanilla put strikes as low as 95.00 have proved popular,

but the interest has been strongest in strikes layered between 98.00 and 102.50.

-With USD/CNY realised vols ticking higher in recent sessions, hedging against

two-way price swings remains a popular trade, with $110mln 7.1765 1m straddle

one of the more interesting trades to cross in early European hours.