Chinese traders are running for cover in the options market as renewed trade tensions with the US trigger volatility in stocks and the yuan.

Total open interest in China 50 ETF call options surged to a record 1.96 million contracts as of Friday, while a gauge measuring demand to buy bearish contracts on the offshore yuan soared by the most since early 2018 last week, according to data compiled by Bloomberg. Tweets from US President Donald Trump threatening to raise tariffs on Chinese goods triggered a $624 billion rout in onshore equities. All eyes are on Beijing to see how it responds.

With limited ways to hedge -- the ETF tracking some of the nations biggest stocks is the only mainland security on which options trading exists -- volumes are likely to remain elevated until investors get more clarity on trade, according to Wang Chen, a Shanghai-based partner with XuFunds Investment Management Co.

Everyone is scrambling for a hedging tool and that is led to the high open interest in the options market, said Wang. No one knows what could come out of the trade negotiations as the talks drag on, and that brings great uncertainty.

Open interest in China 50 ETF call options contracts expiring in May reached a level so high that it triggered a regulatory limit twice last week, according to notices from the Shanghai Stock Exchange. While volume has spiked this year, the underlying fund has seen outflows. Meanwhile, open interest in put options has climbed, peaking in April.

The city’s equity benchmark has tumbled 5.7% this month, while the offshore yuan has lost about 2.4% in the past six sessions. Trade tensions escalated last week as the US hiked levies on more than $200 billion in goods, prompting China to immediately say it is forced to retaliate. The latest round of talks ended on Friday in Washington with no deal. Trump said the US was right where we want to be and Chinese state media blamed the US for the impasse.

The yuan has become part of the trade negotiations after the US raised concern that Beijing is deliberately depreciating its currency. The offshore yuans three-month risk reversal jumped 39 basis points earlier last week, the most in more than a year, reflecting higher demand for short-yuan wagers in the options market.

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