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Fri Nov 1, 2019, 11:27 PM

Billions Worth of Sterling Bets to Expire Worthless After Brexit Deadline Passes

Traders preparing for a Halloween shock in currency markets after the last Brexit deadline placed bets worth billions of pounds in options, most of which expired worthless on Friday.

Sterling is holding its ground above $1.29 after the European Union gave the U.K. another three-month extension to the previous Oct. 31 exit date. That left many options maturing Friday out of the money, including a notional value of over 10 billion pounds ($13 billion) that the currency would slump below $1.28 or climb above $1.30.


These options, giving investors the right to buy or sell at those levels, may have been placed as hedges or as bets on a sharp move for a last-minute Brexit deal or if the U.K. crashed out of the bloc at midnight. Speculation in the pound has emerged as a political issue, with allegations that Prime Minister Boris Johnson has links to such investors and rival Jeremy Corbyn attacking hedge funds at the start of a campaign for a December election.

In total, more than 20 billion pounds worth of options expired at 2 p.m. in London on Friday, according to data from the Depository Trust & Clearing Corporation, an unusually high number when it comes to the pound-dollar currency pair. Those having bought the options would only lose the premium paid, which still could be costly.


This follows up my earlier posts about Brexit Disaster Capitalism: 8 Billion Bet on No Deal Crash-Out by Boris Johnson's Leave Backers and Boris Johnson's billionaire leadership backer urged prorogation before he became PM.

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