Investors eye LatAm recovery via fx options

LatAm
By Beth Shah
02 Apr 2014

Investors globally have been selling volatility on Latin American currency pairs in order to generate premium following a recovery in the region's currencies. Such trades are standing out in what has been a quiet week in fx options due to record low levels of volatility.

Typical strategies include selling upside strikes and risk-reversals on the US dollar against the Brazilian real. “This enables you to benefit from selling upside strikes to generate premium which is used to purchase downside puts to benefit from the downward move in spot,” Peter Kinsella, fx strategist at ...

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