Source : Reuters

European stocks risk falling sharply on Monday given the level of complacency about weekend elections in France and Greece implied by the options markets.

Investors have had some time to get used to the idea that Socialist Francois Hollande will be the next French president and that there will be a backlash against the traditional parties in Greece.

But the risk that the new political landscape could affect national and European policies in a way that investors won't like may not be fully reflected by the positioning in the equity derivatives market.

"The market is in a very dangerous situation," said Julien Nebenzahl, strategist at technical analysis firm Day-by-Day.