FxWirePro: Hedge GBP/CAD through next month covered puts as reduced OI of Aug 15 calls by -22939 and short term corrections underway

We can understand from the change in open interest of this month's call option for British pounds is seen at -22939 which is highest among all OTC contracts. But it is there is a significant jump in contracts of puts with September month expiry. By this we can make out buying interest is deteriorating on the verge of fed's rate hike news are nearing.

Technical watch:

It would be projected as upcoming swings may head towards an intermediate correction since many bearish candle patterns occurred on both daily and weekly charts. On daily charts shooting star, hanging man and gravestone doji have formed on peaks at 2.0499, 2.0522 and 2.0538 levels respectively. It has shown the effects of those dojis in prevailing price slumps.

The leading oscillator (RSI) is converging with current price dips, this would be also treated as the price is attempting to take halt and correct for some time. While we've also seen %D line crossover on slow stochastic above 80 levels which is overbought region. Our recent target was achieved after breaking at 2.0420. Our next target for downside is 2.0206

But for the traders who are risk averse and sensing further dips then such element of suspicion in downtrend can be arrested through covered puts.

So how do hedge this risk: Writing covered puts is a bearish options trading strategy involving the writing of ATM put options along with shorting the obligated quantities of spot FX. So that the risk of exercise would be taken care by spot FX.