Traders in Hong Kong said Deutsche Bank has been building up a massive over-the-counter equity option position in HSBC over the past few weeks, which has been the buzz of the market. Equity officials said the German bank has been buying around USD40 million (notional) of calls per day for the past several weeks and as a result short-term implied volatility on HSBC options has jumped 10 basis points to 35bps. "They've been quite aggressive," said one equity derivatives head in Hong Kong, noting that Deutsche Bank has been purchasing a variety of call options in various maturities roughly daily. He added, "I'm quite puzzled by it." Nick Fennell, head of equity derivatives in Hong Kong, declined comment.
Deutsche Bank Reportedly Masses Huge OTC Option Play
