Macro hedge funds are piling into foreign exchange derivatives ahead of Brazil’s October 4 presidential election, with bets on a Flávio Bolsonaro win and a stronger real becoming an increasingly crowded trade.
Dealers say the most popular trades have been short-dated vanilla puts, digitals and risk reversals, anticipating a 4–8% appreciation in the Brazilian real against the US dollar following the first round of voting.
“Around 95% of all the BRL options trades at the moment are bullish Brazil
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