Forex Options, a different way to trade - page 2

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Linuxser
5921
Linuxser  
Linuxser
5921
Linuxser  

Go long and cover your shorts

This is the first strategy from a several I will post.

I hope you've read the tutorial and understand the basis of trading with options

Let's say you're long since 2008-02-27 when everybody (experts) pointed the Euro to 1.60. You've entered the spot at 1.5000 SL 1.4770.

Nine days after you trade is healthy with near 340/400 pips profited.

It's time to exit? Absolutely no because there is no real need to exit.

How we can take advantage from current situation?

With uptrends calls are generally cheaps than puts (and vice versa for downtrends. Our SL is a t 1.5140. We start to research about opportunities with calls or binary. On 2008-03-12 we've found a nice call, cheaper and interesting or better we buy a simple binary touch option for 1.5400 level and we boy the option to secure our current profit.

We where trading a simple lot so our profit is near $4000, we buy the option for another $4000 and depending on premium let's say we pay $800 to $1200.

We miss the opportunity to exit the spot above 1.5700 and we prefer to wait for a rebound. Unfortunately market starts to falls at 2008-03-18 and we lost 200 pips form the potential 600 pips.

On 2008-03-24 we execute our call or if we bought a simple NT the desired level ( 1.5400) where touch. We exit our long spot position too.

Let's do some maths.

Long spot profit 1.5400 - 1.5000 = 400 pips ($4000)

Call or binary premium -$1200

Call or binary payment $4000

Total profit= $6800

If we take a bad decision and 1.5400 where not hit and the market rebounded before let's say we're lucky and we could exit at 1.5800 our result will be:

Long spot profit 1.5800 - 1.5000 = 800 pips ($8000)

Call or binary premium -$1200

Total profit= $6800

Files:
Linuxser
5921
Linuxser  

I was waiting for market open to post trades with real volatility but seems Oanda server is with troubles. Something like chart server not currently reachable

I was looking with SaxoBank to explain the short cover and hedging and currently there are now good binaries to hedge positions. But we can explain again the long hedging in real time.

Idea: Long at spot today without SL. Buy a Vanilla Call to protect our shorts with expiration at May 30.

Linuxser
5921
Linuxser  
Linuxser
5921
Linuxser  
Linuxser
5921
Linuxser  

Files

Some files to make calculations with options. Find three file sinside, for Calls, for Puts and BS model.

Files:
options.zip 38 kb
Linuxser
5921
Linuxser  
Linuxser
5921
Linuxser  
4xtrader
241
4xtrader  

I've found the site here that might be usefull to learn about Forex Options

Linuxser
5921
Linuxser  
4xtrader:
I've found the site here that might be usefull to learn about Forex Options

Excellent link 4xtrader.

Maybe members could feel a little fear because options looks complicated but they aren't. This kind of documents or videos helps to make the learning easy.

Few brokers offers fx options. It's because they're complicated to trade and traders does not like or because they have fear to offer this instruments.

Another point is ho popular options are?, most than we can think. The world is moving around options been futures the most simple instrument.

Without options prices for everything will suffer extremely changes, for producers and consumers. From cocoa, sugar, iron, shares, stocks to currencies; options are the only way to maintain a relatively calm capitalist world.

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