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Cable Update (GBPUSD)

  • #399,481
  • Sep 21, 2014 4:17pm Sep 21, 2014 4:17pm
Quoting nAVIN2007
{quote} u typing like yur word mean anything to me..i am telling u ..u will be lucky to to see 1.65..and no hard sell
Coming to get you nAV
Attached Image (click to enlarge)
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Come with me if you want to live....
  • #399,482
  • Sep 21, 2014 4:20pm Sep 21, 2014 4:20pm
Quoting srt
{quote} True, options might not affect the market just the same as a S/R line might not hold so for anyone that pays no attention to S/R areas then you can ignore any option barriers. Looking @ options of +$500 million and I'm a big bank that has $500 million on the line @ a certain price, am I going to just sit there & watch the money go out the window if I think I can control price enough for a certain period of time to collect my $500 million? The same big bank might see an important S/R line on the chart but if they have no money in the...
the 500mil or whatever is the notional value of the contracts reported on the DTCC, the actual amount of money to be won/lost by either counterparty is 1 or 2% of that.
  • #399,483
  • Sep 21, 2014 4:28pm Sep 21, 2014 4:28pm
To further my point, I've gone onto the DTCC database.

This is a list of All the GBP/USD options trades executed and cleared last Thursday and Friday.

Note the notional value, and then look at premium, in effect the premium is what is at risk for a bank/HF as it goes to expiration to see if the option is ITM or OTM

As we can see 250mil trades go thru all the time, the $$ on the line is tiny compared to notional
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  • #399,484
  • Sep 21, 2014 4:38pm Sep 21, 2014 4:38pm
Quoting Aws1962
To further my point, I've gone onto the DTCC database. This is a list of All the GBP/USD options trades executed and cleared last Thursday and Friday. Note the notional value, and then look at premium, in effect the premium is what is at risk for a bank/HF as it goes to expiration to see if the option is ITM or OTM As we can see 250mil trades go thru all the time, the $$ on the line is tiny compared to notional {image}
There's so many different expiration dates & strike prices completely out of order so pretty hard to tell. Are you sure that's all cumulative data or just individual trades that took place? I'm definitely new to this research so only understand what is happening when the options are bought/sold. If the dollar amounts are much smaller, then I'd pay less attention to the data.

***Looking at it again, I see those are just individual trades that took place on Thursday & Friday so hard to tell how many took place previous days/weeks.
  • #399,485
  • Sep 21, 2014 4:41pm Sep 21, 2014 4:41pm
Quoting Aws1962
To further my point, I've gone onto the DTCC database. This is a list of All the GBP/USD options trades executed and cleared last Thursday and Friday. Note the notional value, and then look at premium, in effect the premium is what is at risk for a bank/HF as it goes to expiration to see if the option is ITM or OTM As we can see 250mil trades go thru all the time, the $$ on the line is tiny compared to notional {image}
There is definitely some confusion on this thread, with many assuming the notional amount on an expiring vanilla contract is what the writer of the option will pay-out to the buyer in the event of the trade being in-the-money at the expiration time on the expiration date.
  • #399,486
  • Sep 21, 2014 4:44pm Sep 21, 2014 4:44pm
Quoting srt
{quote} There's so many different expiration dates & strike prices completely out of order so pretty hard to tell. Are you sure that's all cumulative data or just individual trades that took place? I'm definitely new to this research so only understand what is happening when the options are bought/sold. If the dollar amounts are much smaller, then I'd pay less attention to the data.
I worked on an options trading desk until 2007 and never saw any exotic trade in the market that paid out anything close to $500m. No bank would touch, say, a digital with this size pay-out, as the size of the delta hedges would simply be too much for the spot market to handle.
  • #399,487
  • Sep 21, 2014 4:45pm Sep 21, 2014 4:45pm
Quoting srt
{quote} There's so many different expiration dates & strike prices completely out of order so pretty hard to tell. Are you sure that's all cumulative data or just individual trades that took place? I'm definitely new to this research so only understand what is happening when the options are bought/sold. If the dollar amounts are much smaller, then I'd pay less attention to the data.
As an ex-options desk flow trader, let me explain as clearly as I can...

Running an options book on the sell-side, is mostly about keeping yourself delta and gamma neutral, that means buying and selling spot every couple of minuts (obviously algos do this for us). So when we see a $500 million expiration, while there may only be $1million on the line between me and my counterparty, we have to trade spot A LOT as we get closer to expiration (due to maths, if youre familiar with how the greeks operate in FX, then you'll know)

If the market has been short gamma for a while, a small move in the underlying spot price can cause me to have to buy/sell a lot of spot very quickly. This results sometimes in fast moves towards the strike value.

Basically, the notional value doesn't really matter, you have to think of all the delta/gamma hedging that is done in the run up to expirations, this could 100's of million in spot, hence why we see these levels act like magnets.

All in all, it doesn't matter why it does this I suppose, just that large (> 1billion) expirations that are high delta (i.e. close to where the market is) will act as "magnets to price"
  • #399,488
  • Sep 21, 2014 4:46pm Sep 21, 2014 4:46pm
Quoting gammase1
{quote} I worked on an options trading desk until 2007 and never saw any exotic trade in the market that paid out anything close to $500m. No bank would touch, say, a digital with this size pay-out, as the size of the delta hedges would simply be too much for the spot market to handle.
Our exotics desk won't touch any DNTs >10 mil in size. Especially at the moment.
  • #399,489
  • Sep 21, 2014 4:48pm Sep 21, 2014 4:48pm
Quoting Aws1962
{quote} Our exotics desk won't touch any DNTs >10 mil in size. Especially at the moment.
Of course. The assumed risk is too large.
  • #399,490
  • Sep 21, 2014 4:51pm Sep 21, 2014 4:51pm
Quoting Aws1962
{quote} All in all, it doesn't matter why it does this I suppose, just that large (> 1billion) expirations that are high delta (i.e. close to where the market is) will act as "magnets to price"
  • #399,491
  • Sep 21, 2014 4:52pm Sep 21, 2014 4:52pm
Quoting Aws1962
{quote} As an ex-options desk flow trader, let me explain as clearly as I can... Running an options book on the sell-side, is mostly about keeping yourself delta and gamma neutral, that means buying and selling spot every couple of minuts (obviously algos do this for us). So when we see a $500 million expiration, while there may only be $1million on the line between me and my counterparty, we have to trade spot A LOT as we get closer to expiration (due to maths, if youre familiar with how the greeks operate in FX, then you'll know) If the market...
Thanks for the explanation from someone that's been there. This is the type of information I've been looking for but couldn't find. Gives a new perspective on the options influence in the market. I've been holding options in my account everyday for the past 10 years but never fx options so a learning experience for sure.
  • #399,492
  • Edited Sep 22, 2014 5:13am Sep 21, 2014 5:03pm | Edited Sep 22, 2014 5:13am
Quoting stewrigh
{quote} And what exactly are we supposed to deduce from that valuable inf HDA
Just a band of useless numbers that don't mean shit in an over $3trillion market.
  • #399,493
  • Sep 21, 2014 6:19pm Sep 21, 2014 6:19pm
6245 could be a good buy spot
Attached Image(s) (click to enlarge)
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Come with me if you want to live....
  • #399,494
  • Sep 21, 2014 6:25pm Sep 21, 2014 6:25pm
Quoting fxtyrant
{quote} well im only expecting a move lower for the short term... how short... well 1 week time.... only down to 1.6250 area. why? because of H4 Rejection of SMA(200) dont worry. im not bearish. now.... i do notice that breakout. but i expect to see a Daily chart double bottom before i go long for good.
ok, good level there
Come with me if you want to live....
  • #399,495
  • Sep 21, 2014 7:20pm Sep 21, 2014 7:20pm
Quoting Ullen
{quote} I can also tell you that it will hit 1.65400.
Let other laugh loudly, the fact you are right..... spike to 1.6330 .... I don't know if many SL of shorters there already killed....

1.5540? I am not sure........considering Friday daily candle, bearish has a good reason...
  • #399,496
  • Sep 21, 2014 8:59pm Sep 21, 2014 8:59pm
Could be possible good place to short.

Setting short at 1.63445 S/L 1.63695
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  • #399,497
  • Sep 22, 2014 12:39am Sep 22, 2014 12:39am
nearly 80 pips movement in Asia, like the good old days...
Come with me if you want to live....
  • #399,498
  • Sep 22, 2014 12:57am Sep 22, 2014 12:57am
it should go down ....
would it ?
  • #399,499
  • Sep 22, 2014 12:58am Sep 22, 2014 12:58am
Red Alert is down with BDP
  • #399,500
  • Sep 22, 2014 1:32am Sep 22, 2014 1:32am
short to 326

GU M15
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