Asia Colour

What’s fueling the equities rally?

1. Momentum traders and trend-followers are reportedly re-leveraging, amplified by August’s lower liquidity.

2. Corporate share buybacks have surged to $1.15 trillion this year. Goldman Sachs’ trading unit has seen record client demand for dips.

Potential Implications:

• Risk-on sentiment could extend to crypto and gold, pushing BTC higher given the strong demand for topside calls.
• U.S. elections remains a key focus, with BTC skew favoring puts pre-election, and a steep 6-point vol spread between pre- and post-election expiries. The Democrats’ platform lacks cryptocurrency support, while the Republicans pledge to end the ‘unlawful and un-American crypto crackdown’.

Trade Idea

Given the potential for market volatility and election-related risks, we suggest a defensive, high yield-generating and limited downside strategy for Q3.

Amplified Range Accrual (10 Weeks)

• Receive weekly 120.6% p.a. coupons every Friday if BTC fixes between 55,000 65,000 or lose 1% of your principal if it fixes outside the range (capped at 10% max loss over 10 weeks)
• Max Potential Payout: 120.6% p.a. in weekly coupon if BTC/USD fixes within the coupon range for every week
• Expiry: 25-Oct (10 weeks)
• Coupon Range: USD 55,000 to 65,000

Spot Ref: 61,000 BTCUSD