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Oct 01 - 06:55 AM

GBP/USD - Options Prove Their Worth As A Brexit Strategy

By Richard Pace  —  Oct 01 - 05:20 AM
  • GBP/USD option implied volatility high over Brexit talks nL1N2GR083

  • Options thrive on volatility - regardless direction - hence high price

  • Options trade in conjunction with a cash hedge to monetise any volatility

  • Brexit related headlines certainly bringing that volatility nL1N2GS07S

  • GBP/USD up from 1.2808 Wed, falls 1.2950-1.2819 Thurs

  • Cost of a 1-week straddle at 11.0 implied volatility is USD 156 pips

  • Overnight options get NFP, but 2nd fiddle to Brexit talks nL1N2GS07N


GBP=D3 Click here

Source:
Refinitiv IFR Research/Market Commentary

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