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Guaranteed hedging system?

  • #1
  • First Post: Edited Dec 24, 2011 9:11am Dec 15, 2011 6:22am | Edited Dec 24, 2011 9:11am
By the way, I'm constantly making approximately $50 everyday by hedging 5 lots of AUD/USD and the same amount of calls and puts. No, it's not like a lot of money but at least I never lose any money and can feed myself without ever looking at chart everyday.

For idiots like Dredding82 who don't even know the difference between synthetic long/short positions and straddles, and blame someone's sharing of strategies and will never make any money in forex and just dream about buying a corvette by putting a corvette picture on his profile and show BS manners all the time and never be able to actually buy a corvette in his life, I deleted this method and will stop sharing this post.

Thanks
When I buy it, it moves down. When I sell it, it moves up.
  • #2
  • Dec 15, 2011 6:47am Dec 15, 2011 6:47am
But the options prices don't typically move in a pip-for-pip correlation with the price of the underlying currency.

Options prices are affected by how far the strike price is away from the current price, time until expiry etc.

If the underlying price moves by 100 pips and the option price only moves by 80 or 90 pips then the interest won't cover the loss.

Of course you may be in profit, depending on the direction the price moved, but the profit isn't generated by a hedge but by directional trading.
  • #3
  • Dec 15, 2011 7:20am Dec 15, 2011 7:20am
Quoting Andy B
But the options prices don't typically move in a pip-for-pip correlation with the price of the underlying currency.

Options prices are affected by how far the strike price is away from the current price, time until expiry etc.

If the underlying price moves by 100 pips and the option price only moves by 80 or 90 pips then the interest won't cover the loss.

Of course you may be in profit, depending on the direction the price moved, but the profit isn't generated by a hedge but by directional trading.
That's when you buy call only or put only. If you buy a call and sell a put at the same strike price, they move the same worth of 100 pips of the forex pair.

I have tested this for months.
When I buy it, it moves down. When I sell it, it moves up.
  • #4
  • Dec 15, 2011 7:49am Dec 15, 2011 7:49am
Quoting pujolshomerun
That's when you buy call only or put only. If you buy a call and sell a put at the same strike price, they move the same worth of 100 pips of the forex pair.

I have tested this for months.
Fair enough

How much interest would you earn on 100,000 USD or GBP worth of forex?
  • #5
  • Dec 15, 2011 8:06am Dec 15, 2011 8:06am
Please explain step by step what should i do? i'm novice in options
Aut cum scuto, aut in scuto
  • #6
  • Dec 15, 2011 8:09am Dec 15, 2011 8:09am
Hi all,

I am not familiar with options in the forex market, but I supose that the principle is the same as per shares (greeks and so on). So I do not know what magnitude is the price of a contract is and expiration dates for these contracts.

Said this:

- I presume that this strategy would be valid (or more efficient) if the interest rates are significantly different. E.g. AUD/JPY or NZD/JPY would be appropriate. E.g. USD/JPY would not be very good idea.

- A question: long term (6 to 12 months or more?) expiration dates or short term expiration dates?

- I presume also that this strategy would work only if the volatility is high enough to move the pair.

- Another question: in theory it sounds well. Have you tested it?

Best Regards

gonso
  • #7
  • Dec 15, 2011 11:19am Dec 15, 2011 11:19am
Quoting pujolshomerun
With this method, I think you can make money safely.

You need to use both FOREX and currency options.


Step. 1

1. You have to figure out in which direction (long or short) the FOREX pair gives you positive roll-over interest.


Step. 2
2. Buy (or short if you make interest money in short direction) 100,000 units of Forex pair.

Step. 3
3. Short (long if you are short in step 2) 100,000 units of call and long (Short if you are short in step 2)100,000 units of put options of the same currency.

*The call and put options MUST have...
So your not hedging....its a carry trade..........YAWN! lol
  • #8
  • Dec 15, 2011 12:54pm Dec 15, 2011 12:54pm
Hi pujolshomerun

Can you make an exact example of your next trade this way (currency, expiration date, strike etc.)?

Thanks!
  • #9
  • Dec 15, 2011 7:12pm Dec 15, 2011 7:12pm
Quoting Dredding82
So your not hedging....its a carry trade..........YAWN! lol
It is hedged. When you make this position on SAXO platform, you will see that your Margin Utilisation is 0%. It is completely hedged.

Study more about options before you blame someone.
When I buy it, it moves down. When I sell it, it moves up.
  • #10
  • Dec 15, 2011 7:13pm Dec 15, 2011 7:13pm
Quoting Andy B
Fair enough

How much interest would you earn on 100,000 USD or GBP worth of forex?
I'm doing it with AUD/USD and it gives me good interest everyday.
When I buy it, it moves down. When I sell it, it moves up.
  • #11
  • Dec 15, 2011 7:14pm Dec 15, 2011 7:14pm
Quoting kofix11
Hi pujolshomerun

Can you make an exact example of your next trade this way (currency, expiration date, strike etc.)?

Thanks!
Its' not like you trade this time and next time. You just hold the position for a couple of weeks and you make money from interest
When I buy it, it moves down. When I sell it, it moves up.
  • #12
  • Dec 15, 2011 7:29pm Dec 15, 2011 7:29pm
Quoting pujolshomerun
Its' not like you trade this time and next time. You just hold the position for a couple of weeks and you make money from interest

they dont pay interest here in the u.k. so what to do ?
  • #13
  • Edited 8:15pm Dec 15, 2011 8:01pm | Edited 8:15pm
Quoting pujolshomerun
It is hedged. When you make this position on SAXO platform, you will see that your Margin Utilisation is 0%. It is completely hedged.

Study more about options before you blame someone.
No sorry its just a carry trade....Since you are COLLECTING THE INTEREST ON THE PAIR...So it would be more of a straddled carry trade.

http://www.investopedia.com/terms/c/...#axzz1gevP3bUF

But seems your using a straddle to get your carry trade........Maybe you should research more of things you wish to talk about.
http://www.investopedia.com/terms/s/...#axzz1gevP3bUF
  • #14
  • Dec 15, 2011 8:10pm Dec 15, 2011 8:10pm
Quoting Dredding82
No sorry its just a carry trade....Since you are COLLECTING THE INTEREST ON THE PAIR...

http://www.investopedia.com/terms/c/...#axzz1gevP3bUF



But seems your using a straddle to get your carry trade........Maybe you should research more of things you wish to talk about.
http://www.investopedia.com/terms/s/...#axzz1gevP3bUF

Oh and BTW...There is a show on CNBC called Options Action
http://video.cnbc.com/gallery/?video=3000062663
you might want to watch that show if you want to learn how to straddle a trade.

http://www.investopedia.com/terms/h/...#axzz1gevP3bUF
  • #15
  • Dec 15, 2011 8:37pm Dec 15, 2011 8:37pm
Quoting Dredding82
Oh and BTW...There is a show on CNBC called Options Action
http://video.cnbc.com/gallery/?video=3000062663
you might want to watch that show if you want to learn how to straddle a trade.

http://www.investopedia.com/terms/h/...#axzz1gevP3bUF
Carry trade is when you actually sell another currency and buy another one to collect interest or etc.

But in this method, the net exposure is completely 0% and whether the price never moves or moves 1000 pips, their is no loss so it is actually hedged.

The price has moved hundreds of pips since I made the position and the net loss is $0 except the spreads

I don't think you even understand how this position works.
When I buy it, it moves down. When I sell it, it moves up.
  • #16
  • Dec 15, 2011 8:39pm Dec 15, 2011 8:39pm
Quoting Dredding82
So your not hedging....its a carry trade..........YAWN! lol
It is a carry trade that is fully hedged from what I understand. I have not explored this opportunity myself but for people interested in earning interest with no risk, it may be a good idea.
  • #17
  • Dec 15, 2011 8:40pm Dec 15, 2011 8:40pm
Quoting PipStar
It is a carry trade that is fully hedged from what I understand. I have not explored this opportunity myself but for people interested in earning interest with no risk, it may be a good idea.
You are correct
When I buy it, it moves down. When I sell it, it moves up.
  • #18
  • Dec 15, 2011 10:40pm Dec 15, 2011 10:40pm
What size positions are you working with as of this moment? I don't see a benefit unless you're working with double digit lots sizes to make it worthwhile. What is your average hold time as I'm also not as familiar with options? Maybe some examples would be nice.
  • #19
  • Dec 15, 2011 11:49pm Dec 15, 2011 11:49pm
Quoting pujolshomerun
Carry trade is when you actually sell another currency and buy another one to collect interest or etc.

But in this method, the net exposure is completely 0% and whether the price never moves or moves 1000 pips, their is no loss so it is actually hedged.

The price has moved hundreds of pips since I made the position and the net loss is $0 except the spreads

I don't think you even understand how this position works.
How about this...Show a picture of your account....where there is no risk and your % gain from the "no risk" trade. Enough of your BS talk about no risk or how someone might not know what you are talking about. I posted links to tell you what you are trying to do! So i think i know a little about what you are trying to explain!
Quoting pujolshomerun
Most FOREX brokers(or market makers) pay/charge you rollover interests everyday.

But do they actually spend their own money to give you interests, or do they simply deliver the interests from the banks they deal with? Or is it from the market?


For example, if FXCM or Oanda decides to trade themselves, can it trade without worrying about interests because they are the ones who pay/receive interests or do they still have to pay/receive interests to/from the banks they deal with?


I know for a fact you know nothing of the subject from your past post a few months ago....
Quoting pujolshomerun
but the number of buyers and sellers are NOT always same for a broker. if a big boy trades with a broker company and makes lots of interests everyday the company can lose money.
  • #20
  • Dec 15, 2011 11:54pm Dec 15, 2011 11:54pm
Anyways...since you do not want to listen to someone that might know what you are trying to do....have fun being here for more years to come every other month with a newbie question you should have already known the answer to before you even made your first LIVE deposit! BYE BYE...
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