FX Options Analysis The Edge Pros Use

Whole point of fx options analysis is to analyze what fx options traders are buying to use this info to trade fx spot markets.

So no need to trade fx options yourself or open any new fx options trading account.

You can keep trading spot markets with your current account at your broker.

It sounds like you're saying it's not worth getting into for trading. Too bad, trading Options provides a completely different dimension to trading. There's obviously no advantage to being Long since leverage in Forex isn't an issue, but being net Short and collecting the premium as the clock runs out, or doing a range-capturing position probably gives me close to twice the trading opportunities.

Thanks again.

Edge, for your information, you might find this useful, or for anyone visiting this thread in the future, I finally found the information I was looking for regarding trading these instruments. Basically, it's what Spot Forex was prior to about 10 years ago, being decentralized, unregulated and very illiquid. Financial suicide to trade, I think. But Spot Forex came around fairly quickly once interest built, so hopefully Forex Options will in the future.

Rob

Forex options markets commentary on Dec 23rd 2013 at London open.


At The Money (ATM) forex options implied volatility changes of USD major forex pairs:

- 1 week fx options volatility increased in USDJPY & AUDUSD fx options,

- 1 month fx options volatility decreased in all fx options,

- 3 months fx options volatility decreased in all fx options.



Fx options traders were buying forex Out of The Money (OTM) options in the following fx options markets:

- light positioning for a bullish AUD & CAD by action with fx options with 1 month expiry.


Commentary of forex price action in fx options markets:

Wrote on Friday, Dec 20th 2013 in an email sent to my VIP Members that fx options traders were buying options to take position for a bullish AUD and since then AUD did go UP by around 60 pips.


Potential fx spot markets trading setups:

During today's Asian session fx options traders were...


Read more: FXoptionsANALYSIS.com

2013 that just ended was incredible year for those that see what a big potential daily fx options analysis have in giving us all The Edge Pros Use.

Let us continue reaping huge benefits in using action of fx options traders to give us even greater rewards in 2014!

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Next week the battle continues and I choose the side of fx options traders represented by big players like banks to show us where fx spot prices wants to go in 2014.

Interesting 1st trading day of 2014.

Volume in forex spot and options markets is still low but fx options 1 week implied volatility increased and now exceeded 1 month options volatility.

Spot gold and silver jumped up in price today which could be due to big funds repositioning amount of money of their funds invested in commodity markets.

All in all a good start to a new year and potential for moves coming next week when big players are back from holidays.

Will be interesting to watch action in fx options markets especially new positioning with AUDUSD and gold options.

Forex options markets commentary on Jan 3rd 2013 at London open.


At The Money (ATM) forex options implied volatility changes of USD major forex pairs:

- 1 week fx options volatility increased in all USD fx pairs and XAUUSD (gold) options,

- 1 month fx options volatility increased in all USD fx pairs and XAUUSD (gold) options,

- 3 months fx options volatility increased in all USD fx pairs and XAUUSD (gold) options.


Fx options traders were buying forex Out of The Money (OTM) options in the following fx options markets:

- light buying of EURUSD puts with 1 week and 1 month options expiry date,

- light buying of USDJPY puts with 1 week options expiry date,

- light buying of AUDUSD calls with 1 week and light buying of AUDUSD puts with 3 months options expiry date.



Commentary of forex price action in fx options markets:

Well, finally fx options volatility is increasing in 1 week up to 3 months fx options markets. This looks like the real deal and fx spot markets could be preparing for big moves next week.

I wrote on Friday, Dec 27th 2013 to my VIP members that fx options traders were doing good buying of USDJPY puts which could mean potential good trade to enter SELL USDJPY around 105.00 level. But due to low volume, spot price needed 3 extra days to finally went in direction of where fx options traders predicted and put their new money in.

Picking right trade and stay in and not close at break even indeed is an art and a science but no worry there should be at least 2 such good entries per month so plenty of chances to make money in 2014.


Potential fx spot markets trading setups:

During today's Asian session fx options traders...

Read more: FXoptionsANALYSIS.com/blog

FX Options Weekly Commentary Jan 4th 14

Trading week that ended on Jan 3rd 2014 brought mostly light actions in EURUSD, USDJPY & AUDUSD forex options markets.

FX options 1 week implied volatility increased in all USD fx pairs, XAUUSD (gold) and XAGUSD (silver), which was to be expected since it was the start of the new year when many large funds reposition their assets.

Biggest effect of this was seen with large funds increasing their investments into precious metals and to no surprise platinum finished as a top performing financial asset this week with gold also having a strong finish after bouncing almost 5% higher from around $1,180 level.

Let’s do a recap of most significant fx options analysis through out the finishing week to see how profitable it was to analyze what forex options traders were buying.

Cause of week starting in 2013 and finishing in 2014 there was a low volume in financial markets and not much action of fx options traders to reposition their investments in currency options markets.

What was expected to see was rise in fx options volatility – mainly 1 week which is telling us that next week could create big moves in fx spot markets.

Next week we have FOMC meeting and Non-farm payroll release on top of ECB and BOE interest rate decisions so we can expect to see EURUSD and GBPUSD to move up or down depending on the news released next week.



This finishing week as expected we didn’t have any good buying or selling of any fx options done by fx options traders.

There was few light actions like light buying of EURUSD puts (positioning for EURUSD spot price to go DOWN) & light buying of AUDUSD calls (positioning for AUDUSD spot price to go UP), which they did predict correctly since by the end of the week EUR did turn bearish and AUD did turn bullish.



Summary: not much action going on this week due to vacations but next week some fireworks are expected in fx options and spot markets.

Read more: FXoptionsANALYSIS.com

Forex options markets commentary on Jan 6th 2013 at London open.

Today’s Asian markets brought following currency options trading action in fx options markets.

Let’s start analyzing forex options intraday changes in fx options implied volatility, forex options volume and changes in forex call and put options prices.


At The Money (ATM) forex options implied volatility changes of USD major forex pairs:

- 1 week fx options volatility decreased in all USD fx pairs and XAUUSD (gold) options,

- 1 month fx options volatility increased in EURUSD, GBPUSD, AUDUSD & USDCAD options,

- 3 months fx options volatility decreased or unchanged in all USD fx pairs and XAUUSD (gold) options.


This is the first big forex trading week this year with big players coming back from holidays and Wednesday to Friday will be packed with big news that could set direction of currencies for the entire 1st quarter.


Read more: FXoptionsANALYSIS.com

Extremely low volume in ‪forex‬ spot markets plus ‪‎fx‬ ‪options‬ 1 and 3 months implied ‪volatility‬ unchanged or decreasing is telling us that traders worldwide are on the sidelines and not want to risk their money entering new trades until ‪FOMC‬ Minutes are released today.

FX Options Weekly Commentary Jan 11th 14

Trading week that ended on Jan 10th 2014 brought mostly light actions in EURUSD, USDJPY & AUDUSD forex options markets.

FX options 1 and 3 months implied volatility decreased – despite week being packed with big news. This proved once again that fx options traders were right by staying on the sidelines and NOT expecting big moves in fx spot markets.

Most traders are impatient and want to trade something every day while smart traders wait to enter markets when markets are ready to make big moves. So far this week we’ve seen most fx options traders taking money out of fx options markets.

Let’s do a recap of most significant fx options analysis through out the finishing week to see how profitable it was to analyze what forex options traders were buying.

This finishing week due to fx options volatility decreasing we didn’t have any good buying or selling of any fx options done by fx options traders.

There was few light actions which none of them would make targeted profit of at least 100% from entry price due to so many changes in strength of currencies due to released news – start of the week USD was going bullish then Friday’s NFP made USD go bearish so most fx spot prices were going up and down like a jo-jo toy.

Being a long term profitable fx trader is not just about thinking how much money to make with new trade entries BUT also how much money to SAVE by not entering new trades when markets are not ready to move.

This week was a perfect demonstration why daily fx options analysis is The Edge Pros Use and how in the hands of skillful forex analyst it can tell you when it’s time to enter markets and when it’s better to stay on the sidelines and SAVE money from entering wrong trades.



Summary: action of fx options traders or better saying lack of action was telling us to do same as them – stay on the sidelines and SAVE money for weeks when fx spot markets will be ready for starting new trends.

Read more: FXoptionsANALYSIS.com

Huge drops in fx options volatility especially with 1 week fx options expiry - one of the lowest in last 12 months.

Is USD preparing to go bearish and is gold ready to break $1,260 and start a new bullish trend?


I'll say if SP500 starts following Nikkei 225 on the way down then USD might not lose much in value but gold could be one of the better gaining assets this month or in 2014.

FX Options Weekly Commentary Jan 18th 14

Trading week that ended on Jan 17th 2014 brought mostly light actions in EURUSD, USDJPY & AUDUSD forex options markets.

Looking changes of At-The-Money options through entire week we see that 1 and 3 months implied volatility increased in AUDUSD, GBPUSD and USDCAD fx options.

All 3 currencies – AUD, GBP and CAD finished week lower with biggest loser being AUD.

Let’s do a recap of most significant fx options analysis through out the finishing week to see how profitable it was to analyze what forex options traders were buying.

There were few light actions – best one being light buying of AUDUSD puts with up to 9 months expiry that I reported on Wednesday, Jan 15th 2014. From that time AUDUSD did go DOWN by around 150 pips.

Read more: FXoptionsANALYSIS.com

Trading week that ended on Jan 25th 2014 ended with a bang on Friday, Jan 24th 2014 when stock markets started going down which brought fear in the financial markets. To no surprise risk off currency to profit in such situation was once again JPY.


Let’s do a recap of most significant fx options analysis through out the finishing week to see how profitable it was to analyze what forex options traders were buying.

We had 1 good buying done by fx options traders involving 3 months fx options which happened on Friday, Jan 24th 2014.

FX options traders were doing that day good buying of USDJPY puts with 1 month up to 6 months options expiry.

Surprisingly or not just few hours after London open (with USDJPY at that time around 103.45), USDJPY did go DOWN by around 140 pips.

Read more: FXoptionsANALYSIS.com

This week will be all about FED's interest rate decision so prepare yourself for a volatile week and increase in fx options volatility.

FX options and spot markets traders - watch out on AUDUSD, gold and silver action this week.

One more day until FED interest rate decision so prepare popcorn cause FED's taper/no taper show must go on.

Well we got light taper announced by FED yesterday but fx options volatility is still not rising despite emerging markets plus stock markets in a fear mode.

What does this tells us?

Simple answer - fx markets lack entering of new volume to push currencies to start trending.

Trading week that ended on Feb 1st 2014 ended with another significant move on Friday, Jan 31st 2014 when Nikkei 225 lost 3.3% in a single day and USDJPY closed at 102.06.

On Friday, Jan 24th 2013 I wrote inside my daily fx options analysis that by action of fx options traders – when they were doing good buying of USDJPY puts (positioning for USDJPY to go DOWN) with up to 6 months expiry, that area around 103.50 to 104.00 could be a good entry point to SELL USDJPY.

Let’s do a recap of most significant fx options analysis through out the finishing week to see how profitable it was to analyze what forex options traders were buying.

I was warning for last 2 weeks to watch action in stock markets and mainly action in USDJPY.


Read more: FXoptionsANALYSIS.com

This week we could see currencies start trending.

Biggest impact this week could be on EURUSD.

Lots of action today already in fx options markets and even 3 months fx options volatility is rising.

Non farm payroll today and stock markets going higher during Tokyo session today.

USDJPY in a spotlight today.

This week we had ECB, BOA and now NFP and nothing scared stock markets so far.

Are we going today for 3 in a row?