• GBP/USD 1.4000 is said to hold a wealth of FX option barriers and triggers

• A similar situation to EUR/USD, where 1.2000 is a major RKO trigger level

• RKO holders benefit if triggers intact at expiry - can sell USD at discount

• There's been various vanilla option trades with 1.4000 strikes bought, too

• Shows the perceived potential for 1.4000 to be reached if USD keeps falling

• Implied volatility supported but well below prior highs - traders dilemma

• 1-month expiry risk reversals regain rare premium for USD puts over calls

• Related - Options flag true extent of July 3 NFP data risk to USD/FX
GBP/USD risk reversals


GBP/USD FX option implied volatility

(Richard Pace is a Reuters market analyst. The views expressed are his own)