1110 GMT - As sterling rises, options betting on it rising have barely moved and they look cheap, Societe Generale options strategist Olivier Korber says in a note. GBP/USD realized volatility--a measure of past movements--is "surging with the faster pace of dollar moves." However, GBP/USD implied volatility--which measures expected moves based on options pricing--hasn't reacted, leading to a "large negative vol risk premium." Korber advises buying a GBP/USD two-month one-touch option, with a knock-in at 1.31, a bet which would pay out if GBP/USD hit that level within two months. GBP/USD two-month implied volatility trades at 6.878%, having traded above 8% in late October, according to Refinitiv. GBP/USD rises to a 10-week high of 1.2554, according to FactSet. (jessica.fleetham@wsj.com)
(END) Dow Jones Newswires
November 21, 2023 06:10 ET (11:10 GMT)
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