Yuan options (puts)
Hi - does anybody know of any US retail brokers offering yuan options? Interested in loading up on puts and playing the devaluation theme. Cheers
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You mean one of the most crowded trades? People just got crushed by shorting the RMB 2 weeks ago when the central bank basically recalled all the RMB and you could not get borrow. Off shore RMB is CNH and it trades differently. Also you can just hold onto dollars ... lol
Most etfs have fee leakage and its tough on something like currency. However, with the BOJ going negative on rates, china may very well devalue. CYB, CNY and FXCH are some etfs
^ DM - you're clueless if you think the trade is crowded.
OP - to trade Yuan options you'd need a prime broker, or a prime of prime (PoP) - not a retail broker. If you've got at least 500k USD, I could connect you with a London based PoP that may consider taking you on. In the US there's FC Stone, but they're focused on futures, not FX.
Thanks for the offer. Not in a position to have a prime broker or pop. If the deval does indeed materialize, there will be massive knock on effects. Will need to play this theme some other way. Thanks again
Yea there are plenty of ways to play this indirectly. Run a few regression analyses of companies that export from china vs. yuan spot. I'm sure there are plenty of securities out there that trade inversely with yuan. You can always lever up via options or buying on margin. Youre probably thinking in the right direction but I dont think an outright Fx short on the yuan is too easy for small retail investors.
Not going to really argue with you here. The trade is also incredibly hard to put on in real size. Sure plenty of people want in but how will you get exposure to a controlled currency? Offshore RMB is a different market and the clearing bank is Bank of China ...
Anyhoo no point in arguing as I am quite clear about this trade
Hard to put size behind 1m CNH?
It's more liquid than the Euro...
Few retail brokers create a synthetic CNH spot. Interactive brokers and Oanda do it.
A matter of preference, but in the case of the Yuan trading the underlying gives you similar optionality to owning options without paying the premium+theta, especially considering where near dated vols are trading. In the event of a deval you get massive upside, and if not your losses are limited to the trade-weighted peg - an asymmetric payoff.
Has anyone tried to borrow EWH recently?
Just wait for the data on what the FX reserve declined by - this is coming out on Feb 6.
China just instituted new capital controls of $5k on unionpay cards. They're aggressively trying to pump money into the domestic market ahead of CNY via reverse repo and restrict that money from leaving the country.
yep bleeding FX reserves could be a catalyst. pumping money mkts with incremental liquidity won't do anything to solve their problems and the majority of the market sees it that way.
don't normally give SBs, but fwiw I gave you one. my apologies for calling you 'clueless' in a prior post - you're clearly not.
No worries. Its hard to give people the benefit of the doubt on this forum so I get it. Plus my "crowded trade" comment was probably a bit of an exaggeration. I guess what I meant was the most obvious trade. Everyone knows where the RMB SHOULD go but its hard to predict where it will go given so many factors out of the markets control
Separately, China relaxed mortgage rules in tier 2 cities. They're just trying to get people to spend money instead of go abroad and buy properties. This is interesting to see but the latest p2p Ponzi scheme is not helping things though haha
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