DislikedHi folks, I'm after a bit of advice/info on fx options. I have savings in AUD (in Oz) but I live overseas, and I want to protect against further declines in AUD/USD, i.e. protect the value of my savings while I'm overseas.Ignored
If you buy a put, you will pay for the time premium. And there's no telling if your put will make money before the put expires.
The easiest option is to convert some of the money to US dollars and have a plan for the rest (e.g. sell 1/3 if it goes up by x%, or down by y% etc.)
However, if you do want to look at options, and if the amount of money is reasonably substantial, there is a somewhat crafty but riskier alternative to buying puts: you could sell calls against your Aussie $.
You can do this either
1. by selling a call (or calls) on an AUD future. As ZS has said, this is very risky as each underlying AUD futures contract is for 100K USD, or
2. if the amount is smaller or you just would prefer less risk you could sell calls on FXA. Not sure how much liquidity there is on those but it could be worth a look.
NB if you didn't shove the AUD into your trading account your broker would probably think you were selling naked calls (whereas in reality you would not be). However if you chose IB as your broker you could fund your account in AUD. Not sure exactly how it would work out because AUD futures and FXA are both denominated in USD but it might be worht looking into. If you're committed to holding the AUD for a period of years you could make a nice bit of money selling the calls...as long as you realise if AUD spikes you'd probably be losing out etc.
I have no clue what I'm talking about.