One-month risk reversal on USD/CAD, a measure of the spread between call and put prices, has regained call (bullish) bias with a bounce to 0.475 from -0.087 seen on Feb. 1, according to data source Reuters.
A call option gives the holder the right but not obligation to buy the underlying asset at a predetermined price on or before a specific date. A put option represents a right to sell.
The latest bounce in the risk reversal suggests investors are adding to bets to position for a rise in USD/CAD (or weakness in the Canadian dollar).
At press time, USD/CAD is trading mostly unchanged on the day near 1.2773, having declined by 0.5% to 1.2780 on Tuesday.
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