FX Options Calls

Hello, my name is Ty. I have been a trader (both part time and full time) for about 8 years. I have lost and made my fair share of money. Most of my trading has been focused around Spot FX. Most recent I managed a 25 million allocation for a multi billion dollar wealth management group based in the mid west. The allocation was pulled due to market conditions and redemptions in there "core" fund. My strategy is very systematic. I have 60 min shorter term systems and 4-6 hour long term swing systems. All are still doing amazing.

The point of my new thread is to do market breakdowns and FX options calls. Just a place to get my calls out there and track and get comentary on my trading style from other traders.

My calls are basic. I depend on my 4-6 hours strategies to generate signals. Once those signals are generated I spot most recent S+R levels and place bull and bear credit spreads 20-50 pips outside those key S+R levels. I assume I will get around 4-8 signals a month. The projected returns will be 4-15% a month.

I will be posting the exact prices of both legs of the spread option. I will also do a screen shot of the account if anyone questions any of the trades. Also, I will be using Saxo FX. The reason I mention this is due to the very much "retail" spreads. Meaning, if I can get the returns I project on the "retail" spread then I should be able to get much better on institutional spreads that I am used to trading on.

If you have any question let me know. I will start posting trades as soon as they come.

Thanks
Ty

Looks like we will be getting 2 signals at the open. A counter trend play with the USDJPY (bull put) and a continuation trade on the EURUSD (bull put). The S+R level where I will be placing the spread on the usdjpy will be around 93.50-93.75 and on the eurusd around 1.5750. I will let you know the exact fills and experation on both trades if we get confirmed signals. These will be 1-2 weeks spreads.

Let me know if you have any questions.

Thanks

USDJPY Long Put 91.50 Expiry Date June 10th - Open Price .16
USDJPY Short Put 93.50 Expiry Date June 10th - Open Price .26

Net Credit = .10
Break Even = 93.40
Full Profit = .10 anything over 93.50 at Expiry (June 10th)

I am trading a 100k account using somewhat higher leverage. I did a 5mil trade size. If the trade is a profit it will produce a $5,254 profit (5.25%). If trading a smaller account size, say 10k you could trade 1/20 and a profit would produce (2.63%) with a 250k trade size.

Remember, this is based on my swing trade system signals along with S+R levels. There is a chance I will close the position before expiry if major S+R is broken to preserve cash. I will post any updates to this trade and total profit/loss when close or Expiry comes.

Let me know if you have any questions.

We will get a bull put call on the EUR but I will not book it right away because we should get another 40-50 pip pull back in the next few hours. This will help me collect more premium when the trade is booked.

(fyi -this is still going along with the system, I am just being smart about booking the trade to try and collect as much premium as I can get before it booked. If the eur starts to take off, volatility could move up and premium's could remain somewhat the same as they are now. This is a chance I am willing to take to try and get better premium in the long run.) This is a touchy game I am playing. I dont want to wait to long because we want as much time in the trade as we can get as long as we are confident in our S+R levels. If volatility would move up in the next 4-6 hours and price move down a little that would be the best beat for the trade because then premiums would move up nice. Long story short. I will book the trade within the next 1-6 hours no matter what.

I hope that makes sense.

FYI - If any of you have questions regarding FX options or the strategy in general then feel free to ask or comment on anything.

Thanks
Ty

EURUSD Long Put 1.3455 Expiry Date June 10th - Open Price .10
EURUSD Short Put 1.3775 Expiry Date June 10th - Open Price .18

Net Credit = .08
Break Even = 1.3767
Full Profit = .08 anything over 1.3775 at Expiry (June 10th)

I am trading a 100k account using somewhat higher leverage. I did a 5mil trade size. If the trade is a profit it will produce a $3,986 profit (3.98%). If trading a smaller account size, say 10k you could trade 1/20 and a profit would produce (1.99%) with a 250k trade size.

Remember, this is based on my swing trade system signals along with S+R levels. There is a chance I will close the position before expiry if major S+R is broken to preserve cash. I will post any updates to this trade and total profit/loss when close or Expiry comes.

Let me know if you have any questions.

AUDJPY Long Put 70.15 Expiry Date June 10th - Open Price .18
AUDJPY Short Put 73.50 Expiry Date June 10th - Open Price .23

Net Credit = .05
Break Even = 73.45
Full Profit = .05 anything over 73.50 at Expiry (June 10th)

I am trading a 100k account using somewhat higher leverage. I did a 5mil trade size. If the trade is a profit it will produce a $2,624 profit (2.64%). If trading a smaller account size, say 10k you could trade 1/20 and a profit would produce (1.32%) with a 250k trade size.

Remember, this is based on my swing trade system signals along with S+R levels. There is a chance I will close the position before expiry if major S+R is broken to preserve cash. I will post any updates to this trade and total profit/loss when close or Expiry comes.

Let me know if you have any questions.

tmoney:

This looks interesting because I've been trading covered calls for just under a year. This is a conservative strategy but my account has returned about 104% in about 10 months. No bank, financial plays, or rumor mill news trading...just basic analysis and a good chart.

Question about the FX options though...

Are FX options traded electronically or through open outcry so how quick are the fills?

Spreads on the options: Do these widen greatly an hour before a major news announcement or even a day before?

Which broker do you trade FX options through?

I'll probably have some more later but thanks for starting this....

Hello Tmoney, this thread looks very interesting, but I'm curious, what do you do if price goes against you? How much do you can lose?

Fish: Congrats on the covered calls. I trade coverd calls also for my longer team plays as an income strategy and a $ cost averaging strat if I love a position and think it might come back in a little over the next x amount of months. If your trading covered calls in equities then you KILLED it over the last year. Talk about the perfect strategy for the market over the last year. If you are in equities, watch out for more rallies. I think iron condors and spread trades in this market may be the best. I would just hate for someone to get cought on the wrong end of a covered call if its not a long term position. If it is a long term position, then keep selling the calls for income and who cares what it does in the short term.
This fills are in seconds. Its all electronic screen based trading.
The spreads are somewhat like Spot. Meaning there is broker manipulation at news times. (retail brokers steel legally) Its part of the game that you need to know how to trade around. Nice thing about my strat is that for me to take a trade around news is not common. Plus volitility from news can be great for premiums a few hours after the news is released.
Saxo is good, PFG is ok. If you can get on the institutional plateforms then spreads become WAY better. PFG and SAXO and others offer institutional plateforms for certain account sizes.

I hope that makes sense.

Faust: Its like any trading. You can lose a lot. But over time of reading my trades you will see how I manage trades that go against me. The worst thing that can happen is a trade goes against me the first day or two after placing the trade. DD can be big then, BUT keep in mind I still have plenty of time for the trade to work out. You will see as I post more that if a trade goes against me after being in it for a few days I can most of the time manage the position into a BE or small loss/profit. Nice thing is, ALL signals are based on my systems (they are very profitable on there own Spot) also using key S+R levels makes its a great strat as you will see I hope. If the S+R levels are broken then the trade is broken. But as time goes on like I have said, you will learn more and more about my strat and see how/why it works like it does.

I hope to help anyone with any questions. I look forward to helping other profit from my many years of failure followed by great success as a trader.

Thanks
Ty

USDCAD Long CALL 1.1275 Expiry Date June 10th - Open Price .15
USDCAD Short CALL 1.10 Expiry Date June 10th - Open Price .28

Net Credit = .13
Break Even = 1.1013
Full Profit = .13 anything UNDER 1.10 at Expiry (June 10th)

I am trading a 100k account using somewhat higher leverage. I did a 5mil trade size. If the trade is a profit it will produce a $6,000 profit (6%). If trading a smaller account size, say 10k you could trade 1/20 and a profit would produce (3%) with a 250k trade size.

Remember, this is based on my swing trade system signals along with S+R levels. There is a chance I will close the position before expiry if major S+R is broken to preserve cash. I will post any updates to this trade and total profit/loss when close or Expiry comes.

Let me know if you have any questions.

Between you and I, one of us severely confused. I'll try to break it down as I see it:

USDCAD Long CALL 1.1275 Expiry Date June 10th - Open Price .15
USDCAD Short CALL 1.10 Expiry Date June 10th - Open Price .28

So far so good. A Bear call spread.

Net Credit = .13 Your credit is One hundred and thirty pips.
Break Even = 1.1013 Break even should be 1.1130. You're not even close.
Full Profit = .13 anything UNDER 1.10 at Expiry (June 10th)
Full profit is if the lower strike is out of the money, which is anything below 1.1000. You lose your net credit from 1.1000 - 1.1130. From 1.1130 - 1.1275, you lose $500 a pip at a 5mil trade size.

I am trading a 100k account using somewhat higher leverage. I did a 5mil trade size. If the trade is a profit it will produce a $6,000 profit (6%). If trading a smaller account size, say 10k you could trade 1/20 and a profit would produce (3%) with a 250k trade size.

It's your account, do what you want, but you are recommending 50:1 leverage, which does qualify as "slightly higher".
Also, at $500 a pip, you're risking 145 pips (1.1275 - 1.1130), which equals $500 x 145 = $72500. Am I missing something here?

Remember, this is based on my swing trade system signals along with S+R levels. There is a chance I will close the position before expiry if major S+R is broken to preserve cash. I will post any updates to this trade and total profit/loss when close or Expiry comes.

Let me know if you have any questions.
Thank you for your time.

Net Credit = .13 Your credit is One hundred and thirty pips. I meant .0013 OR 13 pips
Break Even = 1.1013 Break even should be 1.1130. You're not even close. 1.1013 is correct (13 pips)
Full Profit = .13 anything UNDER 1.10 at Expiry (June 10th)
Full profit is if the lower strike is out of the money, which is anything below 1.1000. You lose your net credit from 1.1000 - 1.1130. From 1.1130 - 1.1275, you lose $500 a pip at a 5mil trade size. Again, I meant 1.1013. SORRY (13 PIPS TOTAL)

I am trading a 100k account using somewhat higher leverage. I did a 5mil trade size. If the trade is a profit it will produce a $6,000 profit (6%). (This should have told you everything regarding the total pips the trade would produce if a profit... Hence 13 pips) If trading a smaller account size, say 10k you could trade 1/20 and a profit would produce (3%) with a 250k trade size.

It's your account, do what you want, but you are recommending 50:1 leverage, which does qualify as "slightly higher".
Also, at $500 a pip, you're risking 145 pips (1.1275 - 1.1130), which equals $500 x 145 = $72500. Am I missing something here? Your correct in seeing that the leverage is high, you are incorrect in your assumtion without considering the overall strategy. The risk would be 1-1 anything over 1.1013 to 1.1275 (so losses could be HUGE). Yes it is high leverage. BUT please keep in mind, I have many systems that are very highly negatively correlated to each other. Overtime, as I am sure you will see. The leverage per trade is an overstatment due to multiple trades at one time and the negative correlation effect over time. I hope this makes sense. I think you will see over time. Let me finish by saying. The leverage I am using is WAY, WAY to high for most. If you would be using your entire trading account on a strat like this then I would use about 1/20-1/50 of the leverage I am using.
Remember, this is based on my swing trade system signals along with S+R levels. There is a chance I will close the position before expiry if major S+R is broken to preserve cash. I will post any updates to this trade and total profit/loss when close or Expiry comes.

Let me know if you have any questions.
Thank you for your time.
Let me know if you have any other questions.

At least the way I interpreted the trade, you had a chance. The way you re-described the trade, you'll be broke before the end of the month.

You said you received 13 pips for that spread, which would be $6500 @ 5mil. But you are risking 262 pips, which equates to ***gulp*** 262 x $500 = $131,000! With that degree of risk/reward, you're better off going to Vegas and putting it all on black.

I don't care what strategy you have or how well you can read a chart. You are one rate hike, natural disaster, bank scandal, whatever, away from being busted. Good luck and I hope it works out.

OK, leverage is high. So..... That means the strategy is bad?

Again, if your ENTIRE account is put on on this type of strat then you would never trade it this high. Keep in mind in my first post. I say that my projected returns are 5-15% a month. I am already projected to make 16% if the trades work out in my favor. This is much higher leverage then typical and much higher then I would tell anyone to trade. Again, how about you watch and see over some time instead of bashing me right off the bat. (why do people do that). How about this. Any new trades will be lower leverage. I will truly go for 5% or so a month. And the return for the year..... Will be 30%+..... Now let me ask you this. If I return 30% would you still bash me? Sometimes I dont get people. If I "will be broke by the end of the month" then dont say anything and let the system fail itself.

OK, leverage is high. So..... That means the strategy is bad?
I never commented about your strategy because up to now, I don't have any idea what it is about. I questioned/commented on ONE of your trades. A bad trade is just that, bad, and it's independent of your strategy. As a manager of a 25mil account, I would think you would know the difference. Now how do suppose the person is feeling to whom you sold the spread? Risking 13 pips to make 262. Alot better return then you are hoping to achieve. But that's what makes a market.

Again, if your ENTIRE account is put on on this type of strat then you would never trade it this high. What you caution about is the same thing you practiced. Your potential loss in the ONE trade is more than your account balance.
Keep in mind in my first post. I say that my projected returns are 5-15% a month. I am already projected to make 16% if the trades work out in my favor. There is great saying that I see from time to time. "Don't worry about the upside because it always takes care of itself." Just worry about the downside. Projected returns mean nothing if you lose your account on ONE bad trade.

This is much higher leverage then typical and much higher then I would tell anyone to trade. Again, how about you watch and see over some time instead of bashing me right off the bat. (why do people do that). If your ego is that fragile, this business is not for you. I never said anything about you. Only your trade. A bad trade doesn't mean a bad trader, but do it often enough and well.......you know how the story ends.

How about this. Any new trades will be lower leverage. I will truly go for 5% or so a month. And the return for the year..... Will be 30%+..... Now let me ask you this. If I return 30% would you still bash me? Sometimes I dont get people. If I "will be broke by the end of the month" then dont say anything and let the system fail itself.

Leverage didn't make the risk/reward numbers any better. It just amplified how fast your potential losses could be achieved. Like I said, I won't comment any further, but hopefully any new traders can look at the thread for themselves and see the other side better. As I said before, "Good Luck".

Thanks useram. It does mean a lot to get responses from other traders. So thank you. I didnt trade our allocation anything like this. This a style of trading that is not fit for many. The DD on opening the positions can be 10-20% alone. The risk reward is way out of whack. I normaly (70% of the time or so) do longer term trades 3-6 weeks until expire. Those trades have much better risk reward. Also, please keep in mind, I would NEVER EVER allow the trade to go against me 262 (unless as you mentioned something crazy happend that moved the market huge) There are ways to manage even a bad trade to a profit using condors/extending a position. But this again is not for everyone because it adds more risk if the unthinkable happens.

Also, the risk reward is very bad but the chance of full profit is very high. But I truly understand what you are saying. In fact, my 60 min strat has a 20 pips stop and will catch 200-300 pip moves about 1 every month and a half. Its just a differnet trading style/system. Combining these trading styles makes the best of both worlds and smooths out most if not all equity curves over a long enough real time sample data.

Thanks Again.