Does anyone have any ideas of how to use option expiration levels in trading spot fx?
If you can get the data showing the size of an option and the expiration date, then I would assume that the level would be protected, with stops on the other side. But this brings about quite a few questions:
Are vanilla options even protected to the same extent that digital options are? How large do they have to be to justify being protected? 300mln? 500mln? Larger?
Are certain pairs or trading times more notorious for these opportunities than others?
How far in advance does it make sense to pay attention to a level? If price is approaching the level a few days ahead of the expiration, will the defenders give up on any chance of trying to defend the level for that long?
Does it only make sense to pay attention to expiration levels if price hasn't been to that level in a long time? How long? A few days? A week? A couple weeks?
Assuming that the options expire at 10am ET, is it realistic to expect either party (or both) to pull their orders immediately after expiration, causing a quick move in price?
I'm sure the answer to a lot of these questions is "it depends on...", but this is something that I've been reading and thinking about for a while now, and I feel a little bit stuck. Without some intelligent discussion to help provoke more thought, I'm probably just going to mark these levels on a chart and watch price as it approaches the level (which isn't a bad thing, but it would be great to get a discussion going if anyone is interested).
If I have been unclear, please let me know and I will try to rephrase.
Thanks in advance for any input.
If you can get the data showing the size of an option and the expiration date, then I would assume that the level would be protected, with stops on the other side. But this brings about quite a few questions:
Are vanilla options even protected to the same extent that digital options are? How large do they have to be to justify being protected? 300mln? 500mln? Larger?
Are certain pairs or trading times more notorious for these opportunities than others?
How far in advance does it make sense to pay attention to a level? If price is approaching the level a few days ahead of the expiration, will the defenders give up on any chance of trying to defend the level for that long?
Does it only make sense to pay attention to expiration levels if price hasn't been to that level in a long time? How long? A few days? A week? A couple weeks?
Assuming that the options expire at 10am ET, is it realistic to expect either party (or both) to pull their orders immediately after expiration, causing a quick move in price?
I'm sure the answer to a lot of these questions is "it depends on...", but this is something that I've been reading and thinking about for a while now, and I feel a little bit stuck. Without some intelligent discussion to help provoke more thought, I'm probably just going to mark these levels on a chart and watch price as it approaches the level (which isn't a bad thing, but it would be great to get a discussion going if anyone is interested).
If I have been unclear, please let me know and I will try to rephrase.
Thanks in advance for any input.