Strategic trade
Trade view / 09 June 2016 at 12:03 GMT

#SaxoStrats: Banks to rally if voters reject Brexit

Head of Equity Strategy / Saxo Bank
Instrument: BARC:xlon
Price target:
Market price:
In case the UK votes to remain in the European Union, it is most likely that financials will respond most positively. The four biggest names in among financials in the FTSE 100 Index are HSBC, Lloyds Banking Group, and Barclays.  

Of those names, Barclays and HSBC are most sensitive due to their regulatory foundation in EU laws. So UK banks will move up on “no Brexit” not because of EU revenue exposure but due to visibility in the regulatory framework.

Another way to play the scenario of UK remaining is through long call options on the FTSE 100. The current price (June 3) is around 2% for an at-the-money 15-Jul option which offers attractive risk-reward ratio because in case of “no Brexit” markets could easily rally discounting a comeback in optimism in Europe.

For more details on this trade, view the related video here.

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Source: Saxo Bank  

Source: Saxo Bank  

Source: Saxo Bank   
— Edited by Michael McKenna

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Non-independent investment research disclaimer applies. Read more


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