More on Option please

Forex is not restricted to just the spot trading of currency pairs. There are several other means of forex trading, such as Options.

However, there are so few info on options I could find on the internet and brokers that offers them dont give much help either.

I am currently looking at IKON GM's Option prodduct; I already know all about the Call and Put on Forex options; what I do not know is how Premium is computed; etc..

I appreciate if any knowledgeable trader could help educate me on OPTION. Thanks!

I've just started studying forex options myself - wanting to find an inexpensive way to use them instead of a stop loss. Check out these 2 web-sites:

http://www.pfxglobal.com/index.php?o...627&Itemid=117

http://www.ise.com/WebForm/options_p...rue&link1=true

I would like to learn more on options. I wonder just how many traders on this forum actually trade forex options.

The subject area is quite complex, which means that as a retail trader youre guaranteed not to get a good deal. I dont trade FX options but equity index options, but the basics are more or less the same in case of put and call options (with a few difference in regard to what is called the volatility smile).

I know Oanda and Saxobank offer them as well.

Premium is computed by use of various formulas of which the most famous is the black scholes formula, which got its creators a Nobel prize some decades ago. That didnt stop them to go on and lose a few billions of investors money years later in the LTCM fiasco.

In short, Premium is computed as a function of the actual price, the strike price and "implied volatility". Since the strike and actual prices are fixed at any given time, implied volatility is what makes an option cheap or expensive, compared to what is the actual historical volatility.

Guess what? no one will sell you an option with an implied volatility thats lower than historical volatility

Their main use to is to hedge a position, but there are tens if not hundreds of different strategies which combine a number of option positions.

Try reading books by Hull or my favorite "options as a strategic investment".

As the saying goes, "real men dont buy options, they write them"

Yup... I was told the same too few years back... studied and took exam but still not quite understand how all the synthetic strategies actually work ... would be nice if one can shed some light here too...

Sounds interesting. Wouldn't mind learning something new and possibly trading them also.

PIPPERO POSTED: I dont trade FX options but equity index options, but the basics are more or less the same in case of put and call options (with a few difference in regard to what is called the volatility smile).

Anyone know or Pippero - are there Equity Index options for forex? And what the symbols are? I'm assuming these can be traded on the regular stock market?

THANKS IN ADVANCE for the reply.

there's no such thing as an "equity index option" for forex, i am guessing you're not aware of the fact that "equities" basically means "stocks".

there are however some currency options traded on stock exchanges, for example the philadelphia stock exchange... check them out at http://www.phlx.com/market/WorldCurrencyOptions.asp

Pippero, I thought I read somewhere that there was an index for forex, now that I am remembering I think it was an ETF. Anybody familiar with this?

Thanks for the reply!

I received a mail inviting me to watch a web-air on currency options. I will not be able to watch, if anyone does please let me know if it was any good.

https://phlx.webex.com/mw0304l/myweb...siteurl%3Dphlx


Regards,
sfish

There is the dollar index ~~ on the Phil exchange? I did not find it.

Here is some info:

http://www.phlx.com/products/product_specs.html


THE PHILADELPHIA STOCK EXCHANGE ANNOUNCES PENNY INCREMENT TRADING FOR WORLD CURRENCY OPTIONS BEGINNING JANUARY 2, 2008
http://www.phlx.com/news/pr2007/07pr121207.htm

there are also ETFs, i believe the symbols start with FX, such as FXE for the euro. google currency etfs..

i havent looked at them, but i bet they offer worse spreads and leverage than trading spot.

the dollar index is traded on futures exchanges i believe

A good place to start.

http://www.ise.com/WebForm/viewPage....rue&link5=true