UK budget gives sterling options traders a wild ride

Sterling slide on the city — Risk.net montage

- By Ben St Clair
- 06 Oct 2022

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Sterling foreign exchange options markets remain on edge after a wild ride last week, which saw implied volatility and trading volumes surge to multi-year highs, fuelled partly by rehedging of exotic positions.

Traders rushed to buy put options after UK chancellor Kwasi Kwarteng announced a surprise £45 billion ($50.9bn) of tax cuts in the so-called mini budget on September 23, causing the sterling/US dollar rate to slide more than 7% within 24 hours. In the following days, demand for options

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