AUD/USD put premium is on the decline

• AUD/USD risk reversals hit 1.5-month high, signaling falling demand for AUD puts.
• Put value will likely drop further as AUD/USD has found acceptance above a key falling trendline.

The implied volatility premium for the AUD puts or the demand for the AUD puts is on the decline, the risk reversals show.

The one month 25 delta risk reversals (AUD1MRR) rose to -0.625 today - the highest level since April 19. The pick up from the recent low of -0.90 represents a drop in the implied volatility premium for the AUD puts.

The rise in the risk reversals shows the fear of a deeper sell-off in the AUD/USD is now ebbing. Also, it adds credence to the bullish break in the Aussie dollar. The AUD/USD pair went past the trendline sloping downwards from the January 26 high and April 19 high, signaling a bearish-to-bullish trend change.

AUD1MRR