By Sean Hayden, director of FX products, CME Group
On the day voters went to the polls in
Scotland, volume in the front month Pound futures was a brisk
36% higher than the prior month’s average daily
Now that the results are in, the futures
and options volume continue to soar. The morning after
votes were tallied, nine of the top ten option strikes by
volume were British Pound contracts.
Futures prices rallied in the days prior
to the vote indicating the market had discounted a vote to
secede. Opponents of independence won 55% of the vote while
separatists won 45 percent and a record 85% turnout.
Trading in the pound will most likely
continue to be in the spotlight even after the vote because
leaders across party lines have indicated the union must change
going forward if it is to last.
The question of an independent Scotland
brought intense interest from around the globe to this country
of 5.3m. The British Pound has moved sharply with increased
interest in trading.
The latest news from Royal Bank of
Scotland that it planned to keep its registered office in
Scotland strengthened the currency.
The day the voters turned out to cast
their ballot, weekly options comprised over 28 percent of the
option volume in the Pound – concentrated in the third
and fourth week expiry.
The weeklies are strong because week 3
options expired the Friday after the referendum results came
Traders and customers have an increased
interest in short dated options because they give the most bang
for your buck. If a customer or trader wants to put on a trade
to profit in a big move in the underlying future, they can buy
a weekly option for the least amount of premium.
The weeklies are liquid and have good
depth so as the traction continues they see even more
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