{quote} If you buy 1 CALL far OTM (very cheaply), then your 1 PUT at that price will be very expensive (far ITM ~ 1 delta). Same for the other side. What am I missing? Also how do you decide whether to do a) or b) ?
Ignored
You should do it on a demo account to see. Your very expensive ITM is not really expensive, it looks like it costs a lot of money but it is comprised of mostly the difference between the current price and the price of that very expensive put. Is that what you are concerned about?
I have wondered how options in the fx market could play a role in at least minimizing some risks. I’ll have to look into this more but interesting thread nonetheless imo. I have never traded options although I have an ok rather novice knowledge about them.
Ignored
Especially good at minimizing risk if the risk is higher than average. If you want to minimize average risk then the premium will probably price that in.
{quote} You should do it on a demo account to see. Your very expensive ITM is not really expensive, it looks like it costs a lot of money but it is comprised of mostly the difference between the current price and the price of that very expensive put. Is that what you are concerned about?
Ignored
I'm concerned about your arrogance, and lack of detail.
you are most likely to kill your a/c in a choppy mkt, where you sell a call/put, then need to buy back at a higher price because the price reaches your strike sold.
And you have got something very wrong - a call option will NEVER have a delta = - 0.2. (Call option always has a positive delta).
