Option Traders Take Risky Bets on Unusually Calm Indian Rupee
- Traders selling options on bets RBI will keep rupee in range
- Trade can turn “dangerous” on short squeeze: Kotak’s Banerjee
This article is for subscribers only.
Currency traders are taking ever more risk playing the unusually calm Indian rupee, selling options that pay them pennies if it stays where it is but exposes them to potentially unlimited losses if it breaks out of its tight range.
The cohort are essentially making a bet that the Reserve Bank of India will continue to keep a tight grip on the currency as it seeks to contain volatility and slow its decline past a record low. But they put themselves at risk of a sudden policy shift, or any external shock that sends the rupee spinning.