Currency Options Trading Is Skyrocketing as Politics Upend Bets
- Hedge funds are unwinding euro-dollar parity and below trades
- Some investors using dollar-yuan weakness to buy call options
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Monday started quietly in the $300 billion-plus currency options market until political headlines triggered the most hectic trading day in nearly two months — a taste of what may lie in store for 2025.
Volumes surged to $108 billion by the close of trade, surpassing even the activity seen on the Federal Reserve and Bank of Japan monetary policy announcement days last month, according to data from Depository Trust and Clearing Corp. Two of the drivers for the spike-up in trading: headlines on Canadian Prime Minister Justin Trudeau’s resignation and potential US tariffs.