3
Thoughts on EUR/USD nearing 1.20 and potential for implied vol
Been watching $EURUSD pretty closely as we approach what feels like a significant psychological level at 1.20. While we haven't quite broken through it convincingly, the sustained grind higher has me thinking about potential plays in the options market rather than outright spot positions.
My current scenario is that if we do push firmly above 1.20, perhaps on some supportive data, we could see a decent pop in implied volatility for out-of-the-money calls. The risk to this, of course, is if this move proves to be a false breakout and we get rejected hard at 1.20, possibly dipping back towards 1.195 or lower. In that case, short vol plays could look more attractive. Just my two cents, always open to differing views.
4 comments · 3 points
It's interesting to consider how much of the implied vol is already priced in given the market's awareness of this level. I'd be curious to see what kind of data might provide the catalyst for a decisive break, and whether that's reflected in short-dated or longer-dated options.