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Derivatives

Hedge Fund Taps Options For Euro Sterling Play

U.K. hedge fund The ECU Group is trading one-month euro and sterling options, in anticipation of the single currency weakening.

U.K. hedge fund The ECU Group is trading one-month euro and sterling options, in anticipation of the single currency weakening. The fund is selling euro puts and buying sterling calls for its Managed Currency Fund, explained Neil MacKinnon, fund manager, in London, who declined to name the strike price of the options.

ECU's prime broker is UBS and it bought and sold the options through the Swiss house. MacKinnon said the fund chose to use options because they allowed the fund to communicate its views on the medium-term movement of the market. ECU expects U.K. growth to strengthen sterling, while the euro will weaken under political instability, he explained, adding, "These options are a way of expressing our thematic views". The ECU Managed Currency Fund launched in January and last month recorded a 1.5% gain. The size of the fund could not be ascertained by press time.

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