Bears Gear Up Their Bets Against Turkey’s Lira to 10-Month High

Investors are paying the highest premium in nearly 10 months to hedge against further losses in Turkey’s lira ahead of the elections in less than five weeks. 

The premium on two-month options to sell the lira for the US dollar over those to buy the Turkish currency — known as the 25 delta risk reversals — widened to 13.7 percentage points on Wednesday, the highest level since the end of June. That’s the contract with closest maturity that captures the period after the vote. The lira was trading 0.1% lower at 19.3166 per US dollar as of 2:37pm in Istanbul.