The 2015 All-Europe Research Team: Equity Derivatives, No. 3: Abhinandan Deb & team

Abhinandan Deb & team

Bank of America Merrill Lynch

First-place appearances: 1

Total appearances: 13

Team debut: 1994

Abhinandan Deb and his Bank of America Merrill Lynch colleagues earn third-place honors for a second straight year. The London-based team of five is recommending that investors position themselves to benefit from the European Central Bank’s quantitative easing scheme — the bank will purchase up to €1.1 trillion ($1.3 trillion) in bonds over the next 18 months — by buying Euro Stoxx 50 Index call options and selling expensive calls on the euro-dollar exchange rate. A successful QE program “will benefit European equities, while monetary policy divergence should keep the euro-dollar exchange rate under pressure,” explains Deb, 35. Regarding the U.K., BofA Merrill’s strategists are advising clients to trade relative value between the volatility of the FTSE 100 Index and that of pounds sterling. The FTSE 100 is well diversified and likely to be less impacted by risks related to the May U.K. general elections and a potential British exit from the European Union, they believe, while pound-dollar volatility could rise further. Moreover, markets are “underestimating the ability of Europe to generate realized volatility because of the ECB’s commitment to easy, unconventional policy,” Deb points out, since a number of factors could generate more actual volatility in the Euro Stoxx 50 than is generally expected.