European shares reached a high in April before a strengthening euro and concerns equities had climbed too fast brought the gains to a halt. The bearishness has now eased, with the stocks jumping on Tuesday after the ECB pledged to bring forward bond purchases before a summer lull. "Puts in the next two months could potentially be dangerous," said Daniel Weston, Munich-based chief investment officer at Aimed Capital GmbH. That headline on the ECB accelerating purchases is a solid reminder not to fight Central Banks that are keeping rates low and being aggressive in buying bonds. It's going to be stimulative for a weak euro and stronger equity markets."
Almost 550,000 bullish contracts on the Euro Stoxx 50 changed hands on average each day in May, compared with about 600,000 puts. The most-traded options on the index on Tuesday were calls betting on a 6.3 per cent increase in the next month. A block of 28,000 contracts wagering on a 4.9 per cent increase by September was the biggest trade in Europe's options market.
Courtesy: Ceylon Financial Times 21 May 2015