Options activity: GBP looks heavy, Bullish exhaustion in CAD
|GBP/USD clocked a high of 1.3126 earlier this week before the dismal UK inflation numbers pushed it back to 1.2984 levels. The focus today is on the UK retail sales number. A weaker figure could yield a much deeper correction in Cable, while an upbeat figure could restore the uptrend.
Options activity shown by the CME data for July 19, suggests traders are losing confidence in the GBP rally.
| Call Summary vs 1.3052 (Source: CME) Data for July 19 | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 25,961 | -437 | 11,581 | -29 | 14,380 | -408 |
| Put Summary vs 1.3052 (Source: CME) Data for July 19 | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 24,549 | 465 | 1,024 | 68 | 23,525 | 397 |
The table above shows the open interest positions in the call options deteriorated by 437 contracts. The drop was mainly in the OTM calls as opposed to strong additions seen in the previous two trading days. Meanwhile, the open interest positions in the put options increased by 465 contracts.
The options market is clearly positioning for a deeper pull back in the GBP/USD pair. At the time of writing, the spot was trading around 1.30 levels. Major support is seen at 1.2964 (10-DMA).
CAD - Put OI jumps, ITM calls stagnant
| Call Summary vs 0.7888 (Source: CME) Data for July 19 | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 13,243 | 297 | 10,261 | 0 | 2,982 | 297 |
| Put Summary vs 0.7888 (Source: CME) Data for July 19 | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 13,796 | 450 | 547 | 127 | 13,249 | 323 |
The open interest positions in the ITM call options witnessed no change yesterday, although OTM call - 0.7950 did witness an improvement in the OI by 208 contracts. However, the total OI in the put options jumped by 450 contracts…
No change in the OI in ITM calls suggests investors do not see further appreciation in the CAD in the short-run. The big addition in the OTM puts adds credence to the view that CAD is due for correction.
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