• EUR/USD option premiums ease as spot market consolidates last weeks gains

• No surprise, as options thrive on volatility and rapid directional moves

• However, this doesn't mean traders have given up on more EUR/USD gains

• There's still demand for topside via EUR call (topside strike) spreads

• EUR calls allow holders to buy EUR at set strike and expiry

• EUR call spreads involve buying a strike against selling another - higher up

• Profit limited to the higher strike but the overall cost is reduced

• Sales of higher topside strikes said to be reducing cost of EUR calls

• That's apparent when looking at EUR call vs put premiums via risk reversals
EUR/USD risk reversals


EUR/USD FXO implied volatility

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