(Bloomberg) -- Investors are betting big that the pound will rally in the next month as they anticipate a delay to Brexit.

New wagers for sterling to strengthen in April totaled nearly 3.4 billion pounds ($4.5 billion) in notional options value since the start of last week, more than double the amount from the prior seven days. Hedge funds have been adding call spreads, looking to either take profit on a rally or roll them over at higher prices, traders in Europe said.

The pound has already rallied more than 4 percent this year to be the best-performing major currency, as traders cut the chances of the U.K. crashing out of the European Union without a deal on March 29. Officials said the EU plans to offer a conditional Brexit extension at this week’s summit in Brussels, after Prime Minister Theresa May was blocked by Parliament’s speaker from putting her exit deal back to lawmakers.

“The options market is pricing out no-deal risk, and pricing in a long extension, or a deal,” said Adam Pickett, a foreign-exchange strategist at Citigroup Inc. “This reflects our view that if there’s a large move, there’s more risk that it will be higher than lower. The market is more afraid of a gap at the top side than on the downside.”

The number of new options bets of 100 million pounds or more increased in favor of gains compared to declines during the past week, according to data from the Depository Trust & Clearing Corp. The biggest group of new positions are for calls expiring in April, including one for 877 million pounds at a strike of $1.38, almost 4 percent above the current price.

The DTCC data is only a section of currency trading, and some of the new positions may be hedges to cover being short in the spot market, rather than outright bets on a pound rally. They could also be traders selling calls to collect a premium because they see the pound falling or being range-bound.

On Tuesday, the only 100-million-pound plus positions reported by DTCC through 12:15 p.m. New York time were calls, totaling a notional 1.2 billion pounds.

“The increased demand for big-sized calls means the market is taking the view that we’re going to have some sort of a soft Brexit that implies sterling rising to the $1.35-$1.40 range,” said Vasileios Gkionakis, head of currency strategy for Banque Lombard Odier & Cie SA. “I subscribe to this directional view.”

(Adds chart of today’s trading, measure of volume.)

--With assistance from Vassilis Karamanis and Killian Ohagan.

To contact the reporter on this story: Todd White in Madrid at twhite2@bloomberg.net

To contact the editors responsible for this story: Ven Ram at vram1@bloomberg.net, Neil Chatterjee, Anil Varma

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