Political crisis in Europe brings volatility back to FX options

Kevin Rodgers
Kevin Rodgers, Deutsche Bank

Foreign exchange traders began pricing further downside risk into euro options last week as political events in Greece and Italy took their toll on financial markets. Following the resignation of Greek and Italian prime ministers George Papandreou and Silvio Berlusconi within a single week, eurodollar fell from 1.3785 on November 7 to 1.3581 on November 11, according to Thomson Reuters.

Although that fall was less dramatic than some had feared, volatility made a comeback last week, having

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