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Traders boost bullish Taiwan dollar options bets after worst July
Dollar-Taiwan dollar put option notional volume neared $8 billion in late July, topping call demand for the first time this year.
Traders have increased bullish options positioning in the Taiwan dollar, pointing to a shift in sentiment after the currency had its worst July since 2015, according to data compiled by Bloomberg and reported by LiveMint Markets. Demand for dollar-Taiwan dollar put options, which gain value when the US dollar falls versus the Taiwan dollar, surged during the final two trading days of July. That pushed monthly notional volume for the contracts to nearly $8 billion, exceeding call options for the first time this year, with early August figures indicating the trend is continuing. LiveMint Markets also cited commentary that some investors are looking beyond seasonal dividend repatriation headwinds as they position for a broader recovery. The report linked the backdrop to support from official interventions aimed at the Japanese yen and South Korean won, as well as a Federal Reserve rate pause, while noting the US dollar remains firm. In market pricing, Citigroup said client demand for dollar-Taiwan dollar options skewed toward downside bets. The Taiwan dollar was up 0.2% for the month at around 32.231 after losing 1.43% in July, with pricing changes including dollar-Taiwan dollar forward swap points moving into discount territory across most tenors, a shift the report said could spill into spot-market activity as corporate treasuries adjust hedging and conversion behavior.