March 3 (Reuters) - Investors are their most bullish on the euro against the dollar since November 2016, options markets showed on Tuesday, after the U.S. Federal Reserve cut interest rates.
One-month risk reversals showed the implied volatility premium for euro calls over puts rising as high as 0.9%, having traded at a 0.4% premium on Friday and a 0.15% discount just a week earlier.
A ‘put’ confers the right to sell a security, while ‘call’ options allow holders to buy.
Investors reckon the euro can appreciate against the dollar as the European Central Bank has far less room to cut interest rates than the Fed. (Reporting by Sujata Rao and Richard Pace; editing by Karin Strohecker)