Hedge funds pile into renminbi FX options

Hedge funds have cashed in on US dollar/renminbi moves in recent weeks, sending traded options volumes to at least three-year highs amid a surge in volatility in the recently calm pair.

Spot USD/CNH jumped 7% to 6.79 between the April 18 and May 13 closing prices – the largest 20-day spot price change in years – on the back of a rising US dollar and declining economic expectations in China. A drop in FX volatility supply helped push vol higher, attracting hedge funds who have looked to options