GBP/USD: value of GBP puts (bearish bets) has hit highest since June 2017
|- The value of the out of the money put options on the GBP/USD pair has hit the highest level since June 8, 2017, risk reversals indicate.
- The increased demand for the put options indicates the investors are likely expecting a deeper drop in the GBP/USD pair.
The GBP/USD one-month 25 delta risk reversals (GBP1MRR) fell to -1.70 earlier today - the lowest level since June 8, 2017 - meaning the implied volatility premium or demand for the GBP puts is at its highest in 16 months.
More importantly, the risk reversals have dropped sharply in the last few weeks from the high of -0.8 seen at the end of August.
It is worth noting that the put value has hit multi-month highs a day after the pair the trendline rising from Aug. 15 lows. So, it seems safe to say that investors are expecting a deeper drop in the British pound.
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.