FX futures options Buying: Is it a lottery? or a business?

Probability:I am expecting EU to touch 1.1120 and recover to 1.1220. Hence this Buy order along with take profit.
Rational: GBP has to rise n depress EG and then pull Eur and GBP together in same UP direction while varying the distance between GBP and Eur to bring about EUrGbp correction but both moving together in same up direction.
Action: Placed pending order to buy July expiry option at 22 pips , spot price shown in picture, and sell at 32 pips .

See the kind of gains made in same option which I bought back went up by 58 PC a few hours after I got out.
Another short dated maturity option went by 90 PC.

80 PC profit in 10 days!
A put option bought on 7th June and liquidated today would have made 80 PC profit in 11 days.
Buying price 75 pips
Selling price 15 pips
Profit of 60 pips on an investment of 75 pips or 5.45 PC per day x 220 trading days or 1,200 PC a year return.

No change in view.
So bought deep in the money put option where the chance of losing time value is minimal. Returns will be non linear . Deep in the money options volume is low but the advantage is that there is no need to have a stop loss to control risk. Have longer expiry timeline and a very small risk of time decay . You won't have being prunlimited despiteo chances of being proved right despite innumerable pullbacks in adverse direction.
The major risk is the intrinsic value . It has direct link with the price movement.

Have paid 300 pips premium.if the future price drops by 120 pips then the profit is likely to be 100 pips or 33 PC of purchased price paid.

Spot futures price is 1.1374 and the difference between deep ITM strike price of 1.1650 is 24 pips for time value and the rest 276 pips for intrinsic value.

Time decay value of 24 pips for about 70 days duration will not hurt the position. I am banking on intrinsic value to go in my chosen direction.
Let us see whether Euro obliges my position.

Take Profit placed. Expecting 50 pips fall in the underlying future price. 38 pips expected profit if the fall happens .

How to augment positive cash reserves like insurance companies do by investing in income generating instruments to increase their reserves?

I bought back an option and sold another which generated more value than intrinsic value. If I had stuck to sold option till maturity I would have earned maximum another 3 points and had to wait for another 72 days . Now I liquidated that option which had a Delta value of 2 and pocketted 85 PC of maximum gains .

I shifted my gear to lower side and re-sold put futures with an intrinsic value of 25 points for 28 points. At maturity if option expires in the money I will be liable for 25 points but because of fear sentiment I am being paid 28 points. If the option expires out of the money , my gains would be another 28 points in addition to what I have already gained.

The trade went into adverse direction and the drawdown until today is 70 points.

Since it is a deep in the money option, time decay value is not affected as much as the change in the intrinsic value.

Update on the eve of expiry.
The underlying futures price is 4 points below the strike price of 1.1350.

The trade recovered from 229 points to close at 348 points. A drawdown of 71 points leaving profit of 48 points today.

Another instance of put buyers making a killing!

On expiry today, the seller has kept all the premim as profit as the option has expired out of the money.
Unlike a buyer of options, the seller keeps only the option premium as the profit.
A buyer makes money (unlimited in theory) from the gain in the intrinsic value of the option plus time value until the time of expiry

The trade I liquidated with 48 points profit went up to 228 points after FOMC meeting.

Just bought EU option for April expiry.
Paid $1,537 for a contract value of $125,000.
81 times leverage without the fear of using stop loss or getting a margin call . And involving no borrowing fees or overnight swap cost.
The only risk is if EU don't move you will lose Time decay.

EU brokers give 33 times leverage, need margin of $4,500.

Let's see what happens during the next two weeks.

Why I bought it? I am looking for a 80-100 pips increase in futures in next 10 days, generating around 50 pips profit for me

Pictures tell the story

GAMES THAT IMPLIED VOLATILITY PLAYS

When I bought this near in the money option I was expecting the Euro to move up swifty, it did not happen .
My target was 100% increase in profits in 2 weeks time hoping Euro will hit 1.12 (futures price)
Futures Prices and Spot prices are not the same.

But Euro went back to touch Support Area hovering around 1.075 and I lost around 70% of my option premium. Theta or time-decay is the factor that hurts options buyers. You can call it drawdown.

But fearing this probability I had bought a long-dated option to give my bias for up direction to work. So I did not
cut loss and stayed put.

Yesterday it hit 160 (my bought price was 123) and I put 140 pips as my Stop Loss. After a 250 pip quick increase in the price I expected it to take a breather.
But my problem was that as a buyer I had entered a zone where I will start losing Theta rapidly and that would again hurt my position and by the time if I were to hit the target forecast price, I would have lost despite me predicting the correct direction and correct target.

So I input the Stop Loss and Euro turned back and hit my Trail Profit point (in my case the Stop Loss was acting as a protector of my profits.

In three weeks, I made a 12.5% profit. If Euro does not move much after hitting 1.11 I will lose premium fast.

If I harbour Hopes that it will reach 1.13 by April-end, I will be in the money by 200 pips. My profit will be 1.13-1.11 = 200 points while I have paid upfront 123 points to buy it. So the nett profit would be 200-123 = 77 points. If it remains at 1.12 by the end of the option expiry the profit will be 100 points while my buying cost is 123 points.

Even getting the right direction, I will stand to lose 23 points.

Important is factoring in selection of trade the surprise element of Implied Volatility which is an important part of Option pricing mechanism.

Initially, I had used heightened implied volatility to buy a call with a bias for Euro going into UP direction and that too QUICKLY. Though it makes no sense to buy when implied volatility is high, but if you have a definite Quick exit plan, you still can go for it.

When I entered into Buy Call positions, implied volatility was high at that point. I was hoping for a quick exit based on that expectation.
But my direction forecast proved to be wrong.

In hindsight, had I bought a Put predicting the price will go back to touch support, I would have made +100% profit in less than 10 days. In fact, based on my study of Open Interest numbers, I had marked Support and Resistance areas. The analysis was not bad.

A beginner should understand this process of Implied Volatility impacting the option premium prices. You have to make Implied Volatility as your friend. Otherwise, even if you are good at predicting direction, but don't understand when Implied Volatility (IV) is high or low, you may end up with a lower profit return even worse no profit .

I think I made some errors.
I made more money than what I wrote earlier. As the server was down, I could not download the trade transaction.

Bought at $1538 each option and sold it at $1912 and made a net profit of 382 for 1 option or 25% profit in less than 4 weeks time.

Now let me workout how many times I would have hit stop loss in spot forex assuming the stop loss was for 50 pips.

Does anyone have an MT4 indicator which can plot hypothetical 50 pips stop loss on a Daily TF? If yes, please provide the link. Thank you