European Stocks Rally on Chinese Growth and Mining Merger Speculation 
This fuel crisis could last for a while. It’s time for a new approach to fuel use - end it 
Morgan Stanley Warns Against Overestimating EV Demand Boost from Rising Oil Prices 
Gold Prices Slide as Rate Cut Prospects Diminish; Copper Gains on China Stimulus Hopes 
Want to cut your energy bills? Here’s how five experts are doing it 
US Futures Rise as Investors Eye Earnings, Inflation Data, and Wildfire Impacts 
Trump’s "Shock and Awe" Agenda: Executive Orders from Day One 
Moody's Upgrades Argentina's Credit Rating Amid Economic Reforms 
UBS Projects Mixed Market Outlook for 2025 Amid Trump Policy Uncertainty 
Canadian Dollar Outlook: Resilient Performance Driven by Oil Prices and Market Dynamics 
NVIDIA Acquisition Rumors Dismissed by Morgan Stanley as Strategically Flawed 
Bank of America Posts Strong Q4 2024 Results, Shares Rise 
The fifth round of Brexit talks starts this week, with fading hopes that there will be “sufficient progress” on separation issues in time for the EU leaders’ meeting later this month.
The pound has been under pressure over the past week, as domestic political uncertainties increased following PM Theresa May’s speech at the party conference.
Cable has witnessed consolidation phase since October 2016 from the lows of 1.2946 levels to the recent highs of 1.3658 levels.
While implied volatilities still skewed to the downside: Please glance through the nutshell evidencing IVs of 2m tenors that signifies the hedgers’ interests of OTM put strikes amid major consolidation phase of GBPUSD.
Unlike EURUSD options, cable options are still pricing more implied volatility in the event of a lower currency (refer above graph). The risk reversal curve remains fully skewed to the downside, especially for longer maturities. These diverging expectations are especially striking in a context whereby there is a strong correlation between EURUSD and GBPUSD.
GBP OTC hedging sentiments are intensifying due to the above Brexit negotiations. Is this the beginning of the final phase bearish trend of the British currency? Not yet, but the risks are rising.
Considering above OTC market reasoning and fundamental factors we think upside risks are on the cards, as result we reckon deploying ATM call option with delta being at around +0.51 in hedging strategies are worthwhile.
We fundamentally view asymmetric odds in favor of the topside case, and this highlights the current cheapness of GBPUSD OTM calls.
The execution: Buy GBPUSD 6m/2m/1m bullish seagull strikes 1.27/1.38/1.34 (Spot ref: 1.3113).
This structure has almost no theta between the current spot and the 1.40 region during the four first months. As it is a very low theta means almost no convexity, it, therefore, behaves like a spot trade during this period in this region.
The payoff, however, provides protection against a spot spiking above 1.27.
Risks: Unlimited above 1.38, the structure involves a 2m/1m OTM short call strikes. So investors face unlimited upside risk if GBPUSD trades above that level in 2m months.
