USD/CNY drove options volumes higher last...>

OPTIONS: USD/CNY drove options volumes higher last week but, while options

volumes are still higher, it's USD/INR, AUD/JPY and USD/TWD hedging activity

that's driving the FX options market so far Monday.

-TWD's persistent weakness prompted USD/TWD to hit the highest level since early

2017 Monday, with markets already hedging for further weakness. Close to $2.50

have been bought in USD/TWD call options for every $1 in puts so far today. Call

strikes at 31.90 and 32.10 have been particularly popular, levels that spot

hasn't traded at since the early months of 2017.

-INR hedging trades have surged following exit polls over the weekend showing

incumbent PM Modi is on track to secure another 5 year term. USD/INR options

volumes have traded at multiples of the daily average, although activity has

been heavily biased toward USD/INR calls, despite the INR strength seen in spot

markets. Some of the larger trades include a $250mln 72.00 call rolling off at

the end of May as well as a $260mln 71.00/71.70 call spread rolling off on June

25th. This mirrors the recovery in USD/INR risk reversals so far Monday, which

gapped lower at the open but have since pulled back much of the losses.