FOREX - Trends, forecasts and implications 2016 - page 695
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Why isn't the Euras already pop? The SOTs are out... The DBs are out too... Mashki and other birds drew drawings... Where are we waiting, smart guys?
Yes, there's some good stuff, sometimes.
Help me understand:
1. Options trading volumes are 10 times smaller than futures? Why watch them then if the futures have a fuller picture?
2.Option - an agreement which givesthe potential buyer or seller of an asset (good, security) the right, but not the obligation, to buy or sell the asset at a predetermined price at a certain time in the future or during a certain period of time .
There are two types of options - options that allow you to buy the commodity - these are called call options. Options that let you sell the product - Put options.
The idea of the option is that you reserve for yourself the possibility to make the required operation with the asset not now, but in the future, at the price you want. These are called strike prices in options. Of course, they do not expire indefinitely, but have a specified lifetime - the date until which the option is in circulation is the expiration date, at which time you either use the option you had in the option or it expires and is no longer exercisable. Of course, this option cannot be free, because in order to get it you have to pay a certain cost, this cost is known as the premium of the option. This value depends on different market conditions, but mainly it depends on the distance between the current market price of the asset and the strike. And because the price of the asset is always changing, so does the value of the option itself. As we already found out, options are traded like any other financial instrument, you can both buy and sell them and, accordingly, you can speculate on changes in the value of the option and make profit.
The way I see it: on Monday my friend comes with a suitcase and sells an option at strike price 1.14 and pays a small premium. After 1 or 2 weeks, one day before expiration, he looks at the price and decides whether he wants to buy at 1.14 or not. If the price is 1.12, he gets it and sits with the option till the blue sky at 1.00. If not at 1.1450, he forgets about the small premium and forgets about it till the next Monday. ???
3. how is it possible to make a forecast if the buyers of options have many times less risk and they do not risk more than to lose the premium they paid? And this guy can make any decision and he will have a whole month to do it.
Well, that's me... where are you waiting?
Help to make sense of it:
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Well, to continue the theme, I am showing you this trick.
If you have been analysing different currency pairs for a long time, then it will not be difficult to create a dollar index indicator. And as we can see, the leading one is the Dollar Index, and the slave is any currency pair.
This means that the index falls first, and then the currency pair, and vice versa.
This can only be seen on the M1 TF. The index indicator is in red