USD/CNY: Escalating US-China trade tension has likely revived interest in CNY put options

The USD/CNY risk reversals turned positive today, signaling the implied volatility premium for the CNY puts (bearish bets) is higher than that of CNY calls (bullish bets).
Investors are likely buying the CNY puts on fears of escalating US-China trade war.

Omkar Godbole FXStreet Contributor

The USD/CNY one-month 25 delta risk reversals (CNY1MRR) rose to 0.175 today, the highest level since Aug. 17, indicating the investors are once again buying the CNY put options.

A week ago, the risk reversals stood at -0.125 - the negative reading meant the CNY calls (bullish bets) were more in demand back then.

So, it seems safe to say that the options market has gone from being bullish on the CNY to being bearish.

CNY1MRR

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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