Central Bank Decisions, Not G7, Seize Options Traders’ Attention
- Investors hedge risk that any Fed, ECB easing may disappoint
- Market looks beyond August to fade cooldown in euro volatility
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Euro-options traders seem little concerned by the impending G7 summit and have started placing their bets for when things will really matter: the Sept. 12 to Sept. 18 period.
That’s when the European Central Bank and the Federal Reserve will hold their policy meetings. Investors expect the central banks to be dovish, yet the extent of the stimulus they may provide remains in question. With some traders looking for a Fed cut of more than 25 basis points, and amid uncertainty about whether ECB President Mario Draghi will announce a major stimulus package once again, the market may find itself wrong footed. Options traders are taking no chances.