The GBP/USD pair may have rebounded from the low of 1.2932 (61.8% Fib R of 1.2812-1.3126) yesterday, but the options activity suggests the decline of the recent high of 1.3126 has more steam.
GBP - Investors continue to buy downside bets
| Call Summary vs 1.2999 (Source: CME) July 20 data | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 26,036 | 75 | 7,149 | 18 | 18,887 | 57 |
| Put Summary vs 1.2999 (Source: CME) July 20 data | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 24,974 | 425 | 1,775 | 21 | 23,199 | 404 |
On Wednesday, we saw a big improvement in the OI positions in the ITM put options, along with a healthy gain in the OI in the OTM puts as well.
The preliminary data for Thursday published by the CME shows investors continued to boost downside bets in line with the decline in the GBP/USD spot. The OI in the OTM puts jumped by 404 contracts. Not much action is seen in the calls.
Back-to-back daily additions in the OTM puts particularly in the 1.29 Put indicates the investors expect Cable to extend the sell-off to sub-1.29 levels.
Yen seen higher
| Call Summary vs 0.00890 (Source: CME) July 20 data | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 18,126 | 851 | 4,252 | 62 | 13,874 | 789 |
| Put Summary vs 0.00890 (Source: CME) July 20 data | |||||
| Total | ITM | OTM | |||
| OI | Chg | OI | Chg | OI | Chg |
| 21,149 | 161 | 6,147 | 345 | 15,002 | -184 |
A big jump in OI positions in near-the-money call options (0.00895 and 0.009) coupled with a decline in the OI positions in OTM puts indicates the investors expect Yen to strengthen despite rebound in the USD/JPY from the 200-DMA on Thursday.
However, gains are likely to be short lived/moderate, given the investors have boosted positions in the ITM put options as well.
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