Despite relative calm returning to..........>

OPTIONS: Despite relative calm returning to USD/CNY spot markets today, there's

been a huge move in USD/CNY 1m risk reversals. The spike today amounts to just

shy of 1 vol point, putting the contract close to the highest levels in favour

of CNY puts seen since October last year. Risk reversals have edged higher since

the beginning of the week as Trump turned up the temperature on the US-China

trade spat, but today's move has been, by far, the biggest.

-Move in risk reversals coincides with marked uptick in implied vols, with 1m

vols now printing above 5.5 points, the highest since mid-December last year.

-USD/CNY options volumes are running around 50% ahead of average and, for a

second consecutive session, there's been particular interest in Cny7.00 call

strikes but Cny6.85 has also been popular.

-Contrary to the move in risk reversals markets, the larger trades in USD/CNY

options today include a $500mln 6.72/6.80 put spread (expiring 30th May) and two

large vanilla put options expiring at Cny6.72 and Cny6.75 (rolling off between

20th and 22nd of May).