Return of volatility revs up FX options market
Macro disruption hikes volatility for eager dealers, however liquidity and spread compression remain a concern
The foreign exchange options business thrives on uncertainty. Volatility brings trading opportunities and keeps the tills ringing at banks. Calm and predictable markets, conversely, can cause trade volumes to dry up.
Prior to this year, implied volatility had been steadily grinding down since 2015. A brief flurry of activity in March 2020 when Covid-19 sent markets into a spin was followed by the return of systematic volatility sellers, driving vol levels even lower than pre-pandemic levels.
B
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@fx-markets.com or view our subscription options here: https://subscriptions.fx-markets.com
You are currently unable to print this content. Please contact info@fx-markets.com to find out more.
You are currently unable to copy this content. Please contact info@fx-markets.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@fx-markets.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@fx-markets.com
More on Trading
EU task force boss calls on NCAs to wield their powers to meet T+1
Europe’s disparity will add to command hub’s challenge to match US co-ordination feat, says Giovanni Sabatini
Morgan Stanley’s DiTrapano joins DB in top e-FX role
He replaces Benedict Carter as global head of electronic FX spot trading
Deutsche Bank’s head of FX e-trading Benedict Carter retires
Carter spent over 15 years at Deutsche in various spot and electronic trading roles
Traders revive emerging market carry trades on vol drop
Investors turn back to high-yield Latin America currencies as implied volatility falls
FX options traders lost in Iran fog
Headline ‘ping-pong’ saps hedge funds’ conviction, though pockets of vol selling have re-emerged
Super fund FX growth threatens dealer ‘tipping point’
Overseas assets – and hedge ratios – set to grow, but lack of collateral squeezes banks
Staff exodus sparks questions about LMAX’s FX swaps venue
At least nine execs that joined from FX HedgePool – including CEO Jay Moore – have left the company
The dollar do-si-do: hedgers review FX moves
Brief return of US dollar to safe-haven status amid Iran upheaval prompts real money investors to pause hedging activity
