Bargain-hunting equity hedgers turn to FX

Currency options are cheap relative to stock index puts, but correlations are uncertain

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Equity investors that can’t stomach the inflated cost of stock index puts are turning to the foreign exchange options market in search of a cheap hedge.

The question facing the bargain hunters is whether a cheap offset will be a reliable offset during the next equity meltdown – but FX markets have other advantages that are currently attracting interest.

“Relative to all other markets, FX is still somewhere you can get a large size done. If you have a big portfolio and you want a lot of

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