Options

This will be probably the dummest post on here but this is the newbie section right
If you get two option contracts,opposite to one another on a volatile pair, one of them will be good and take the profit on that, on the other just leave it and pay the broker the comission. Is this right or tottaly not?
This is a great forum, good luck to all

It's not a dumb question at all.

It sounds good in theory, but in practice, my guess is that the premium eats these types of bets alive. I could be wrong...anyone else wanna take a look at this?

There are a lot of types of Fx options. American or European options, Vanilla or Exotic options. Instead of buying two vanilla options you can try to buy an exotic double one touch option or double no touch option. Depends on what are you betting for.

This is a popular strategy and is called a straddle or a strangle. A straddle is where you buy a put and a call for the same strike price (you straddle the underlying). If stock xyz is at 15, you buy a put at 15 and a call at 15. A strangle is when they are not at the same strike price. When trading options on equities, a lot of traders do this right before earnings announcements or court rulings.

The key is that the underlying has to move more than the cost of the options that you purchased to make money. Due to volatility, the premium prices can be VERY expensive and it makes it difficult to be profitable. There are a few things you can do to give yourself a slight advantage though.


Frank

Thanks v much guys.
so it is a strategy not to be used often but only when a very huge swing is expected otherwise the high comissions end profits. understood.
thanks again

There are many different option strategies here are just a few.
and if want you can look up some complex option spreads like the condor or butterfly