GBP/USD: Put bias strongest since May 31
|- GBP/USD risk reversals hit lowest since May 31.
The GBP/USD one-month 25 delta risk reversals (GBP1MRR) fell to -0.60 yesterday - the lowest level since May 31, indicating the implied volatility premium for GBP puts is higher than the implied volatility premium for GBP calls.
The risk reversals had risen to -0.40 earlier this month.
The decline from -0.40 to -0.60 indicates rising demand for the GBP puts (sell GBP). It appears the investors are expecting a deeper drop in GBP and hence are seeking downside protection.
GBP1MRR
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.