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Free AccessOPTIONS: Hedging Markets Favour GBP, CNY Upside Tuesday
- While FX options volumes are muted so far Tuesday, GBP markets are seeing some signs of life, with GBP/USD notional traded ahead of average for this time of day. Trades seemingly targeting the post-election fallout and the Aug1 BoE decision are helping prop activity.
- Trades consistent with sizeable vol hedges crossed mid-morning, covering 1.2550 and 1.2650 straddles (expiring mid-Aug and mid-Oct respectively). Nonetheless, overall options trade has passed with an upside bias, evident in today's put/call ratio of ~0.78 and noted demand for call strikes as high as 1.2750.
- USD/CNY has also been a pair in focus Tuesday, with downside exposure well in demand despite the pair's recent upside and the USD strength posted since the beginning of the week.
- Just over $3 in puts have traded for every $2 in calls so far today, with put strikes layered between 7.2000-7.1750 making up a decent portion of the volume, as well as ITM puts at 7.2900. Trades generally shorter-dated, but the 7.18 puts standout as they expire on Jul 25th - a week after the conclusion of China's Third Plenum meetings on Jul 15 - 18.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.