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Turkish Lira dropped to a 20-month low on Wednesday, boosting demand for the put options (bearish bets) on TRY and sending one-month risk reversals to the highest level in 12 months. 

Lira fell to 6.7920 per US dollar, a level last seen in August 2018, having begun the year at 5.95. 

Meanwhile, one-month risk reversals for the Turkish lira, a gauge of demand for options on the currency rising or falling against the dollar, rose to 7.80 to hit the highest level since April 2019, indicating investors are adding bets (buying puts) to position for sustained weakness in the local unit. 

Lira’s recent slide also pushed the implied volatility metrics to the highest level in a year, according to Reuters News. 

Risk reversals