By Richard Pace — May 21 - 05:01 AM
• Options charge a premium for strikes in the most vulnerable FX direction
• The direction which is expected to see increased volatility/option demand
• This premium has seen a big increase for USD puts over calls across G10 FX
• AUD/USD is no exception, although it retains a USD call/AUD put premium
• That downside strike risk premium falls to 7-year lows, last seen March 2024
• Even more significant is that it had spiked to 5 year highs in early April
AUD/USD FXO 25 delta risk reversals
(Richard Pace is a Reuters market analyst. The views expressed are his own)
Source:
London Stock Exchange Group | Thomson Reuters
