EUR/USD Options: Open positions in Puts jump ahead of the Fed
|The preliminary data for EUR/USD Oct expiry options published by the CME shows the investors have boosted bearish bets ahead of the FOMC rate decision.
| Put Summary | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 57,430 | 1,831 | 2,011 | 21 | 55,419 | 1,810 |
| Call Summary | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 41,200 | 131 | 20,257 | 27 | 20,943 | 104 |
- The open positions in the Puts increased by 1831 contracts on Tuesday. Out of the money (OTM) Puts added 1810 contracts.
- The open positions in the Calls added only 131 contracts to open positions.
Open Interest Change
Source: CME
- 1.1650 Put added 1393 contracts. These are likely to be fresh longs [cheap insurance] initiated as hedge against long spot positions.
Total Open Interest
Source: CME
- Max open positions are seen in 1.18 Put option and 1.20 Call option. A break below 1.18 would force the Put writers [sellers] to unwind their shorts, leading to a bigger drop in the EUR/USD spot.
View
Investors have hedged against a potential sell-off in the EUR/USD in case the Fed talks hawkish. The rise in open positions in the Put options [bearish bets] gels well with the overbought technical conditions as shown by the Stochastic and the RSI on the weekly chart below-
The weekly 200-MA, which is still sloping downwards could be put to test on hawkish Fed. The weekly 200-MA is stationed at 1.1730.
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