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Jul 12 - 07:55 AM

EUR/USD - Option Barrier Defence May Not Be As Successful As It Appears

By Jeremy Boulton  —  Jul 12 - 07:05 AM
  • EUR/USD low 1.00005 0.5 pip shy of the expected parity break

  • The low suggests defence of 1.0000 option barriers

  • The closer to an option's expiry the greater the potential defence

  • Size of stops below barriers equals the number of euros purchased in defence

  • Those buying will need a decent rally in order to sell to maintain defence

  • Without a rally to offload those buying are just long against the trend

  • The rise from the low has only reached 1.0027 EBS

  • The need to hedge could drive EUR/USD down quickly nL1N2YT0D3nL1N2YT0DY

  • Related nL1N2YT0I0nL1N2YT0F0nL1N2YT0L4

Source:
Refinitiv IFR Research/Market Commentary

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