One-month risk reversal on Palladium (XPD/USD), a measure of the spread between call and put prices, is on the way to register a four-month downtrend according to data source Reuters.
A call option gives the holder the right but not obligation to buy the underlying asset at a predetermined price on or before a specific date. A put option represents a right to sell. That said, the monthly difference between them slumps to -0.725 by the end of Thursday’s trading session, per Reuters. The same represents the biggest bearish bias since February on a monthly basis.
While comparing the same to the XPD/USD moves, the commodity prices are on the way to drop for the third consecutive month despite the latest recovery moves from $2,589.
As the options market signal favors the palladium bears, sluggish momentum and the US dollar rebound should be taken as extra catalysts supporting the commodity’s further weakness.