Currency traders have increased bullish options bets on the Taiwan dollar following its worst July since 2015, with demand for dollar-Taiwan dollar put options surging in late July. The monthly notional volume for these contracts reached nearly $8 billion, surpassing call options for the first time this year, according to Depository Trust & Clearing Corporation data compiled by Bloomberg and reported by livemint.com.
The surge in put options, which profit when the US dollar falls against the Taiwan dollar, occurred during the final two trading days of July. Early August data shows this trend continuing, indicating a shift in investor sentiment. The increased activity in derivatives suggests traders are anticipating a rebound in the Taiwan dollar despite recent seasonal dividend outflows.
This change in positioning highlights a growing optimism among currency traders about the Taiwan dollar’s prospects after a significant decline. The currency’s poor performance in July, its worst month since 2015, had prompted caution, but the rise in put options signals expectations of recovery. This shift is notable given the broader context of currency markets and Taiwan’s economic outlook.
According to livemint.com, the monthly notional volume of nearly $8 billion in put options marks a key data point reflecting this market sentiment shift, with early August figures confirming the continuation of bullish bets on the Taiwan dollar.