Data provided by Reuters shows risk reversals on USD/CNY, a gauge of calls to puts, jumped to five-month highs on Tuesday, indicating increased demand for call options, which given the buyer the right but not the obligation to purchase the underlying at a predetermined price on or before a specific date.
On Monday, risk reversals traded at 0.70 in favor of calls, the level last seen on May 28. The metric has risen from 0.075 to 0.75 over the past four weeks.
Investors seem to be hedging for a corrective bounce in USD/CNY. The pair is currently trading near 6.71, having hit a 27-month low of 6.6412 on Oct. 21.
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