When we are comparing the IVs nothing comes close. Sterling one-week implied volatility, which is popularly known as the cost to protect against swings in the options market is trading just shy of 50 percent. Both in last year’s election and Scottish referendum in 2014, sterling one week IV never crossed 20 percent and not even during 2010’s uncertain election. The only comparable number is from the 2008/09 crisis period when it briefly crossed over above 42 percent.

The referendum is now just less than a week away, hence the actual date is included in the option and demand for insurance higher than ever. Volatilities have gone haywire, more so after recent polls started pointing to a greater possibility of an exit. Yesterday’s Ipsos Mori poll published by the Evening Standard showed 53 percent of the survey respondents support exit while 43 percent wants to stay back.

The pound dropped to 1.4 against the dollar yesterday, before jumping back to 1.425 on the news that Labour MP Jo Cox has been shot and stabbed and died. She was a vocal supporter of the UK staying in the Union. Both the camps have suspended their campaigns for the day in her honor.

The pound is currently trading at 1.426 against the dollar.