Pound Puts Rise as Investors Hedge Against No-Deal Brexit: Chart

Heightened concern that the U.K. won’t agree exit terms with the European Union has helped increase demand for pound put options over that for calls. The spread between risk reversals expiring in nine months and those that expire in 30 days -- which captures the nation’s departure date from the EU -- is at the widest since January. “Demand for puts is on the rise as investors look to protect themselves against the increasing chance of a no-deal Brexit scenario which risks substantially lowering the pound,” said Jeremy Stretch, head of G-10 currency strategy at CIBC.