FX Options Insights 27/09/24
FX option trading reveals EUR/USD downside concerns
Gains in EUR/USD are inconsistent with recent price fluctuations in FX options. Near-date risk reversals were unable to maintain a topside strike premium. Additionally, recently, hedges were acquired to protect setbacks of up to 1.1000. Additionally, the most recent price action indicates that option implied volatility is cutring at new weekly highs. Benchmark 1-month expiry implied volatility has increased from 5.6 on Monday to 6.0. 0.1-month 25 delta risk reversals were traded for EUR puts over calls. That is a new six-week high for implied volatility of the downside over the upside strike. Price action indicates that options are more concerned with EUR/USD losses than with gains.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!