In response to a growth in demand and the need for traders to manage risk at a detailed level, the Chicago Mercantile Exchange (CME) has announced the launch of Wednesday Weekly FX Options.
This will be similar to the Friday Weekly FX Options that are available currently but instead of Friday, these options would expire on Wednesday.
The Wednesday Options would be available for five major pairs, namely AUD/USD, GBP/USD, CAD/USD, EUR/USD, and JPY/USD and would be ready for trading from October 30, pending regulatory approval.
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Paul Houston, Global Head of FX at CME Group, commented: “Our clients want to further refine their exposure to mid-week announcements from the Federal Reserve, Bank of Canada and Reserve Bank of Australia’s meetings before the end of this year. More broadly, as event-related trading activity continues to grow, they are looking for the additional granularity of these short-dated FX weekly options, as well as the ability to leverage capital efficiencies and spreading opportunities available in our markets.”
The existing Friday Weekly Options have been enjoying a great run, with record daily average volumes in September 2017, exceeding the volume from last year by 76.6 percent.
With the major global markets maturing at a fast pace, it has become increasingly difficult for traditional fund managers to generate the same kind of returns that they used to. This has led to the lookout for more riskier trading products as a means of generating better returns.
The Wednesday FX options would be European style of options, like the Friday Option, which means that they can be exercised only at their maturity.