Options activity: OI in GBP OTM puts rise, JPY seen higher

Omkar Godbole FXStreet Contributor

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.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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