Options activity: Investors boost hedges against bullish EUR positions

The EUR is no longer a freight train, if we take into consideration the fact that this week’s rally in the EUR/USD spot has been accompanied by a rise in the OI positions in the OTM and ITM puts and no change in the open interest in the EUR futures. 

EUR/USD EUUQ7 Aug expiry Open Interest Change 

The OI positions in the OTM calls and OTM puts rose by 2615 contracts and 3527 contracts, respectively. This does not indicate any specific bias in the market, but if we take into account the jump in the OI in the ITM puts (+551) the bias appears bearish. 

The sharp rise in the OI in the ITM puts takes the total change in the OI in the put options to 4078 contracts, which is well above the 2719 additions seen in the call options. 

Futures OI remains more or less stagnant

The OI in the EUR futures has gone by a mere 410 contracts since last Friday. The stagnant OI indicates lack of fresh buying interest despite the rally in the EUR/USD spot to a 2-1/2 year high of 1.1777. 

Correction to gather pace

Bearish bias indicated by the jump in the ITM puts, coupled with a lack of buying interest in the futures suggests the EUR/USD could test 1.1540-1.1560 - the support offered by the trend line sloping upwards from June 23 low and July 13 low.