Currency options traders are betting the Korean won's Asia-leading rally since July has further to run. The premium for one-month options benefiting from a rise in dollar-won relative to those profiting from a decline narrowed for a third day Wednesday, signaling growing expectations for won strength. The pair extended its decline to around 1,350 after falling 1.3% in the prior session, its biggest one-day drop in a month.

The won's more than 14% rally since the start of July is set to extend as Korean chipmakers continue to bring overseas capital home to expand production and booming global demand for artificial intelligence and semiconductors bolsters economic growth. Those tailwinds are prompting options traders to position for continued gains into year-end.

"There is active interest in downside dollar-Korean won structures mainly via put spreads or European knockouts out to year end," said Saurabh Tandon, Singapore-based global head of FX options at Standard Chartered Bank. That positioning was evident in the two largest dollar-won trades reported on Sept. 21, both put spreads. One expiring Oct. 21 had strikes of 1,370 and 1,343, according to data from the Depository Trust & Clearing Corp. The trade reaches maximum value if the pair is at or below 1,343 at expiry.