Funds tap options on FX vol amid tariff disruptions
Dealers say vanillas, digitals and knockouts on realised vol increasingly used to navigate Trump news flow
Hedge funds are increasingly taking out complex options structures that speculate on pricing of foreign exchange volatility levels across several currencies linked to US president Donald Trump’s tariffs.
Investors have increasingly looked to incorporate vol-linked knockouts in vanilla FX options to cheapen them up and avoid crowded barrier zones. Others have looked at options directly on realised volatility, including spread trades across multiple currencies.
“We continue to see a very inverted
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