Press Release Summary: Ovetii have advised their Investors should sell Hong Kong dollar call options as the city\'s central bank is unlikely to abandon a 24-year-old fixed exchange rate to the U.S. dollar.¸^@èZşERelease Body=According to analysts at Ovetii, the options market is pricing in a 57 percent chance that the currency will appreciate beyond the upper limit of its trading band at HK$7.75 per dollar in the next three months, compared with 10 percent three months ago, the third-largest U.S. bank said. This is significantly too rich, strategists Yen Ping Ho and Claudio Piron wrote in a report. Call options grant the right to buy a currency at a set price on a fixed date.
The Hong Kong Monetary Authority has been intervening to stop the currency from strengthening as foreign investment floods into Hong Kong equities. The HKMA sold HK$775 million ($100 million), the first time in more than two years. Ovetii senior analyst reportedly stated that Ovetii were quite comfortable putting on this trade. The Hong Kong dollar traded at 7.7510 per U.S. dollar recently from 7.7507.
Ovetii have apparently advised their investors to sell Hong Kong dollar call options with a strike price at HK$7.75 that should expire in three or six months.
Volatility implied by three-month Hong Kong dollar options rose to 0.675 percent from 0.650 percent yesterday. Implied volatility for six-month options was steady at 0.850 percent.
Traders quote implied volatility, an expectation for future price swings, as part of pricing options.
2022
