The forex options market isn’t gearing up for any big moves
Considering there’s three big central bank meetings this week, you’d think that traders would be putting on some decent hedges. I’ve just had a brief look at the options boards this week and there’s not that much flying around. Wed/Thur/Fri are the busiest days but even then, the expiries aren’t record breaking.
The best there is for USDJPY over the Fed and BOJ is 980m at 109.00 13th & 1.69bn at 110.00 14th.
EURUSD is a touch busier across the two days;
- 3.56bn @1.1700/20 13th
- 1.31bn @1.1600 & 2.49bn @1.1700 14th
- 1.40bn @1.1700, 1.65bn @1.1800 & 1.02bn @1.1850 15th
Options positioning isn’t always directly associated with big events but sometimes they can tell us if there are any big hedges going down, and thus hinting at potential moves around these events.
Back to USDJPY and the options market is still showing a distinct lack of interest in covering both the upside and downside. There was some increased downside coverage when risk trades were looking worse for wear but traders are said to be selling vol now, which shows that traders aren’t expecting any wild moves in either direction. That doesn’t make them right in that assumption but it’s a sentiment gauge that often ecompasses the wider market. The fact that USDJPY has been glued to a wide 330 odd pip range since April, and a tighter 100/150 pip range within that is testiment to that sentiment.
For trading, it means we might see some options action around the expiries if we’re near some of these big ones but there doesn’t look to be enough size here to have much of a magnetic effect that we often look out for.