Markets are facing two big unknowns: the possibility of a no-deal Brexit and the chance of escalating trade wars. How can investors simulate these two scenarios to stress-test portfolios? Options markets provide some clues.
To analyse Brexit scenarios, we have focused on calls and puts around March 29, 2019 – the date of the UK’s planned departure. The text of the withdrawal agreement was published on November 14, to be greeted with almost universal condemnation by UK politicians of all stripes