Halister News

(Bloomberg) -- Implied volatility in FX, EM and rates looks to be very low relative to the underlying risk ahead of a flurry of political events from the U.S. presidential vote to a Brexit trigger, Citigroup analyst Steven Englander writes.

• This reluctance to pre-position even for events that are expected to have a significant market impact may reflect a cautious approach to paying premiums when returns are modest
  • Or may signal a belief that investors can still make a profit even if they’re not the first to trade the news
• But they may find it’s not that easy to take advantage of these moves as repressed volatility may emerge in a very sharp burst, prices may move faster than expected with much less opportunity to get a position on
  • And there’s some possibility one-way markets will overshoot