Hedge funds flock to hybrids to trade macro uncertainty
Firms repurpose structure made popular by Trump trades last year
Hedge funds are turning once again to hybrid options – a standout feature of 2024’s wave of ‘Trump trades’. This time, though, firms are using the structure to express views on tariffs and the threat of recession.
Investors placed high numbers of hybrid option bets on US exceptionalism in 2024, as they correctly predicted that a victory for Donald Trump in November’s election would drive US equities and rates higher and strengthen the US dollar.
Trump’s tariff policy has since whipped up fears of
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
Hedge before the fix to avoid predatory traders – research
In simulations, slow and steady hedging for 4pm benchmark orders shaved up to 25% from costs
HSBC, Goldman prevail in shake-up of FX Markets’ Dealer Rankings
The pair thrived serving US retail funds, while Morgan Stanley retained title with life insurer clients
Turn of the skew: FX options dealers balance fragile market
Calls-versus-puts demand flips wildly in response to geopolitical events
Taco trades or fake news fatigue
Is another era of ‘will he, won’t he’ numbing rates and FX traders to its jeopardy?
Japan election result sours hedge funds’ yen options bets
Dealers saw flows in significant size for JPY weakness but were forced to take profits
Mutual funds were USD bulls going into April’s tariff chaos
Counterparty Radar: Positioning in Q1 reflected market sentiment that tariffs would lead to a dollar rally
Investors hope US rate cuts will lower FX hedging costs
European investors in US assets set to boost hedge ratios as implied yields rise
Jive Investments quicksteps towards hedged returns
Brazilian fund manager uses combo of options and forwards to push down hedging costs compared with plain NDF strategy
