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Jan 25 - 03:55 AM

GBP/USD - Option Flows - A Sign Of Things To Come?

By Richard Pace  —  Jan 25 - 02:29 AM
  • Option traders typically buy strikes at levels they think FX rate can reach

  • 1.40 GBP call demand has picked up over recent sessions - 1-3-month expiries

  • These simple options allow holders to buy GBP/USD at 1.40 at expiry

  • Options can increase in value if GBP/USD, and/or implied volatility gains

  • Implied volatility met demand at new long term lows last week

  • Benchmark 1-month now 7.85 from a new crisis low/support at 7.5

  • That's below daily historic - fair value measure nL1N2JU0MJ



GBP/USD 1-month implied volatility Click here

Source:
Refinitiv IFR Research/Market Commentary

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