1-3M EUR/SEK and USD/SEK implied volatility remains expensive. However, it could increase further ahead of the Riksbank meeting and the general election in Sweden.
NOK volatility is generally cheap in our view - especially taking the recent bounce in realised volatility into consideration.
We recommend buying 1M NOK/SEK call spread (1.0860-1.1050 @ 65 SEK pips, spot ref: 1.0860, indicative prices) as a way to express our cautious bullish NOK view and bearish SEK view. Moreover, the position provides a relatively cheap SEK hedge against Swedish election jitters.
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