Weekly: EEM Call Buying, Euro Stoxx, KRW Covariance Eyed

The biggest question on everyone’s lips seems to be when will this rally end? Some people are seeing a further 3%, with a potential 7% to the downside, according to our market sources. But it’s the 3% that has everyone’s attention and not necessarily the 7%, according to traders. With the FOMC meeting just gone, and the BoJ up next, some investors are eyeing a weaker USD. We report today flows seen recently in EEM could be a proxy hedge on the currency. In Europe, volatility hedge funds and long-term asset managers are increasingly looking at opportunities to buy covariance between the Euro Stoxx 50 and euro, Korean won, as issuance of autocallables declines, while back in the U.S. some equity portfolio managers are looking to buy vol via put spread ratios on IWM.