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How FX options can affect spot price heading in to expiration

  • #61
  • Oct 17, 2013 10:26am Oct 17, 2013 10:26am
Quoting TranceTrader
{quote}I would of thought hedging via spot/futures would be best if you're doing a volatility play?
Yes. It is done both with using other options and dynamically on the underlying spot/futures. hedging can still be done on binaries, also can be used to structure synthetically.

Vol traders I can barely understand it is pretty out there to me, but I understand a bit. The real big fish in this pond are vol traders though, I know that much.
  • #62
  • Oct 17, 2013 10:28am Oct 17, 2013 10:28am
Quoting TranceTrader
{quote} Okay that makes some sense. Presumably you don't need to hedge anyway because the risk/reward is asymmetric on binaries unlike vanilla options and there is no volatility risk. I don't understand how buying/selling the same option put/call is the best delta hedge.. doesn't that just mean your flat because volatility will increase symmetrically for both your sell & buy options. I would of thought hedging via spot/futures would be best if you're doing a volatility play?
This is the simplest way, not the best. Delta hedging via spot/futures is more complex and is appropriate for trades lasting at least a few weeks. Also it needs more time and resources.
  • #63
  • Edited 1:32pm Oct 22, 2013 1:14pm | Edited 1:32pm
this just in: On USD/JPY

  1. More large 98.00 option expiries NY cut tomorrow - up to USD 1bln
  2. Also USD 1bln strikes between 98.45-50, with many between
  3. Delta hedging should help to keep pair rangebound near expiries

Ichi cloud on daily at 98.65, 200DMA and fib confluence down at 97.23 and 97.08 respectively.

Small downside bias in options market and USD whacked bad today. But this is an example of something I would not put a directional trade on today. Maybe a DNT if I could.

  • #64
  • Oct 22, 2013 11:23pm Oct 22, 2013 11:23pm
The fx option are resulted into excess purchase or sale of stocks. Which in turn affect the spot price.
welcome
  • #65
  • Oct 24, 2013 10:53am Oct 24, 2013 10:53am
Maturity calendars show AUD 1bln+ 0.9600 expiry tomorrow.
  • #66
  • Oct 24, 2013 11:27pm Oct 24, 2013 11:27pm
This is from FXWire Technicals "EUR/USD pressured by EUR/JPY sales but option related bids underpinned, large 1.3800 option expiries are attracting and compressing the price action"
  • #67
  • Oct 24, 2013 11:44pm Oct 24, 2013 11:44pm
3825 barrier. I am looking for EUR/USD to fail up here and drop, just hit the 3833 so lets see if we can get a reversal in london.

someone is jobbing up here.
  • #68
  • Oct 25, 2013 12:11am Oct 25, 2013 12:11am
Quoting chucklots
3825 barrier. I am looking for EUR/USD to fail up here and drop, just hit the 3833 so lets see if we can get a reversal in london. someone is jobbing up here.
Larger barriers reported at 1.3850. EUR/USD is between a barrier and vanilla expiry.
  • #69
  • Oct 25, 2013 12:20am Oct 25, 2013 12:20am
Quoting srmfx
{quote} Larger barriers reported at 1.3850. EUR/USD is between a barrier and vanilla expiry.
yes barriers a plenty up here, we took out 3825 most recent in NY trade. How much is the vanilla? the PA seen in euro is barrier defense.
  • #70
  • Oct 25, 2013 12:20am Oct 25, 2013 12:20am
hey guys, just heard abt an option Aud/Usd @ .9600 http://goo.gl/M59qCL Price is definately pivoting over that level.

Eur/Usd barrier @ 1.3825? Price looked like it should if there was one there but I didnt hear abt that either. I'm sure any recent Eur/Usd shorts placed their buy stops above that 3825 high though.. fo sho. Oh and its Friday... options shall play.

Hey chucklots and srmfx, can we talk abt vanillas heading in to expiration in here, and barriers in the other barrier option thread? Options already confuse new traders enough
  • #71
  • Oct 25, 2013 12:26am Oct 25, 2013 12:26am
Quoting EmeraldEyes
hey guys, haven't heard abt an option Aud/Usd @ .9600 but its a price level where its pivoting so could be. Eur/Usd barrier @ 1.3825? Price looked like it should if there was one there but I didnt hear abt that either. I'm sure any recent Eur/Usd shorts placed their buy stops above that 3825 high though.. fo sho. Oh and its Friday... options shall play. Hey chucklots and srmfx, can we talk abt vanillas heading in to expiration in here, and barriers in the other barrier option thread? Options already confuse new traders enough
yea no problem, I was just saying the PA is not from vanillas. and yes, large 9600's >1bln in AUD/USD said to be going off NY cut tomorrow (vanillas) as posted. That is right at a trendline here on AUD/USD.
  • #72
  • Edited 1:27am Oct 25, 2013 12:31am | Edited 1:27am
heya chuck, I edited my post. That A/U option hadn't come up on the google machine but it did on DS's site. Reported for tomorrow's NY cut.

made a pic of the PA so far.. got a lack of buying @ 9625, all sell orders there. I've got no flow info as of yet, but if we hear of orders on either side it might open up an opportunity to trade w/ sentiment and back to that strike level.
Attached Image (click to enlarge)
Click to Enlarge Name: audusd.png Size: 34 KB
  • #73
  • Oct 25, 2013 12:52am Oct 25, 2013 12:52am
good luck, i'd like to stay up for london, but not sure I'm not going to make it. I might try harder if it wasn't Friday.
  • #74
  • Oct 25, 2013 1:14am Oct 25, 2013 1:14am
UK GDP data out for Gbp in a couple hours. A large shift in Gbp/Usd could push Aud/Usd away to a range low/high to trade it back to strike.
  • #75
  • Oct 25, 2013 10:51am Oct 25, 2013 10:51am
went pretty much as you described EE, thanks for the insight - really enjoy your posts
Attached Image
  • #76
  • Oct 25, 2013 1:39pm Oct 25, 2013 1:39pm
eur/usd reversed in london as anticipated but not worth much. better trade than aussie though, and gave an hourly signal.

aussie following the trendies from the daily reversal the other day from the fib.
Attached Image (click to enlarge)
Click to Enlarge Name: audusd.png Size: 20 KB
  • #77
  • Oct 25, 2013 1:50pm Oct 25, 2013 1:50pm
Aud/Usd @ .96 .. Didn't see much of an opportunity. Market made their option hedging really tight. Thanks for posting this one up chucklots

Had one trade for +13 pips and another for breakeven. Mostly impressed by less than 4 pips draw down and got out a pip before the high on the one trade.
Aud/Usd 1min chart
Attached Image (click to enlarge)
Click to Enlarge Name: audusdm-m1-ibfx-inc-2.png Size: 100 KB
  • #78
  • Oct 25, 2013 2:04pm Oct 25, 2013 2:04pm
Quoting EmeraldEyes
Aud/Usd @ .96 .. Didn't see much of an opportunity. Market made their option hedging really tight. Thanks for posting this one up chucklots Had one trade for +13 pips and another for breakeven. Mostly impressed by less than 4 pips draw down and got out a pip before the high on the one trade. Aud/Usd 1min chart {image}
no problem. I think it ended up being something like 1.4-5bln in AUD/USD at the strike and with nothing much going on overnight into a Friday I can't say I'm surprised it went absolutely nowhere. DD is a big metric to look at, if you can keep this low, especially in FX, people will highly appreciate this more than out-performance on returns with greater DD.
  • #79
  • Oct 25, 2013 2:26pm Oct 25, 2013 2:26pm
Quoting rich_tee
went pretty much as you described EE, thanks for the insight - really enjoy your posts {image}
Hey thanks! I can't see your time, but looks close to 10am eastern. See how that magnetic effect .9600 had just kinda disappeared after the expiration.. never to return again? Intraday traders longing Aud/Usd would probably put their stop just below intraday support level of .9583/4, at .9580. Retailers thought that support would hold.. not knowing that the ones buying it up back to .96 were done needing to trade today.

Great short opportunities post-option highlighted in green boxes.
Attached Image(s) (click to enlarge)
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Click to Enlarge Name: audusdm-m1-ibfx-inc-3.png Size: 77 KB
  • #80
  • Oct 25, 2013 2:29pm Oct 25, 2013 2:29pm
Quoting chucklots
{quote} no problem. I think it ended up being something like 1.4-5bln in AUD/USD at the strike and with nothing much going on overnight into a Friday I can't say I'm surprised it went absolutely nowhere. DD is a big metric to look at, if you can keep this low, especially in FX, people will highly appreciate this more than out-performance on returns with greater DD.
Shoot, 3/4th of DD was spread! I dont have the right broker to scalp, but its good practice for when I do.
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