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Market volatility may increase (both up and down) in next 30-40 days. Use plain options to safeguard yourself.
(A) Possible rise of crude prices to 90:
1. U.S sanction on Iran begins from 4th Nov and market is already turning skeptical for oil supply.
2. Seasonal winter demand from Europe will start from Dec, creating more scarcity at the time when market is already struggling with tighten oil supply.
3. Technical indicators are also signalling possibility of crude above 90+. If price continues stays above 80, possibility of 89.70-90.30 cannot be ignored. Please refer graph below.
(B) Uncertain US mid term election outcome and even more uncertain is market reaction to it:
1. U.S mid-term election on 6th Nov is coinciding with Iran sanction. How market will react to election outcome will be seen only on 6th, but speculation may lead to volatility in the market. Depending on the outcome of the election, both U.S equity and US Dollar may see either sharp buying or selling interest.
If above are to be considered, next 45 days market may witness major volatile swings. Hence we suggest export hedging using Plain Put Option and import hedging using Plan Call Option.
