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2026-02-16 21:26:56
[Options Market Bets on Long-Term Pound Decline, Political Risks Far From Gone] ⑴ On Monday, the pound stabilized, while the euro dipped slightly by 0.1% to 0.8687 pounds. Convera's Antonio Ruggiero stated in a report that although the political risk premium for the pound has decreased after cabinet ministers supported Prime Minister Starmer, political concerns remain. ⑵ Options market investors continued to buy protection to hedge against the risk of a long-term pound decline. Risk reversal indicators showed that the skew of call options betting on a rise in the euro against the pound was more moderate in short-term contracts than in long-term contracts, indicating that investors still expect political turmoil but are now more inclined to hedge against the risk of further pound weakness. ⑶ Ruggiero concluded: "In short, investors believe that political risks have subsided, but are far from gone."
