The option expired one way or another at 15:00 gmt, as long as the option was above the price at the time of expiry it would pay off to the option owner, hence the tug of war above the price.
Thats why I say only trade the first touch after the bids/offers are reported… the bids/offers have to be eaten up first… this casue a reaction of at least 3 pips, but can be up to 20ish pips.
thank you Charles
Hey OF Traders!
How’d you like that bounce off E/U 1.20600?
I can now afford to buy Dave 60 warm beers 
Charles
I hope not!
Its not a game!
I was out walking the dogs there… did you trade it Charles?
Really, then i treat it like a business. I will enjoy what i am doing then i will do better.
Cheers everyone
I did!
Placed a buy limit just under @1.2059 with a stop 6 pips down, closed it out @1.2069
Charles
Yes Chazza is spot on simondav,
Its a vanilla option (nick named vanilla because its plain and has no thrills attached to it), in this case price can bob up and down above/below the level… the important part for this one, was it closes above 1.2100 for the cut. When there is a large bugger of one of these, then you will find price will spend most of the day within a 50 pip radius of the barrier, as the owner trys to push it away, but the prem payers try to push it near, so that when the cut gets closer they can try to push it under.
We are talking about a lot of money here… not a few million, but hundreds of millions and sometimes billions.
I noticed another bounce below just off 1.2055, didn’t trade it.
I think Dave had said somewhere along the line not to be naive and believe/think that the only orders are right at the price quoted but that there would/may be others around the price 5 pips up and down.
I wonder, would this bounce be attributed to more large orders sitting at 1.2055?
*** While writing this it’s bounced off 1.2055 a couple times now…
re order flow, I had EURUSD 12060 marked up and look on the M1. Nice, not a massive pin head but still quite a quick reaction.
Yes, there will be bids 5-10 pips on each side of the reported number. The problem is, you don’t know how much flow is left there.
The reported number with the bids/offers is the biggest level. The numbers round about it are smaller.
So if the report is 1.5000 bid, then lets say there is £300 million there… while 1.5001-05 may have £10-25 million each. and below at 1.4995-99 may have say £5 million each.
You want to trade the reported number as that has the biggest flow, therefore the move should be safer to take. And only the first touch.
Good thing he didn’t take trade again as since then news on wires re Greece missing debt reduction targets and additional debt reduction could be necessary has fuelled the move downward on the euro blowing past the 1.2080 bids to 1.2052. I actually took at short as soon as new crossed the wires.
Jeff
I didn’t take it because I remembered the first touch rule, but even if I had, I would’ve been out by now…
I missed the news on Greece.
Charles
Charles:
24 July, 2012 11:38:57 AM EDT (GR) EU officials see Greece missing the debt reduction targets set by the EU and IMF and that additional debt restructuring could be necessary- EU officials say Greece will be unlikely able to be pay what it owes and it is likely the burden will fall upon the ECB and EMU Govts to restructure approx €200B in Govt debt they own. Officials highlight the difficulty in conducting such a program and see results either including the ECB taking a writedown on €40B in Greece bonds, or other EMU countries adjusting their loan terms **Reminder: Last week the Greece Fin ministry official noted that Greece might miss 2012 targets as fiscal slippage worsens on deeper recession
Yes.
It’s a very important point… bids/offers do not mean price will rally 50-100-200 pips. The flow is not large enough to shift it that much at a given price. The flow is bids and offers that either buy a position…scale in or out… sell a position scale in or out, of current positions or new positions. If we hear a report about RBS offers @ 1.5560, it doesn’t necessarily mean they are taking a short here… they could be selling to close a long position. Or it could simply be protection bids/offers ahead and behind an option barrier.
ps: check my tweet on the current EURO action.
Thanks Jeff, I was just reading up on that elsewhere, didn’t get in on a trade though…
I hate the EURO anyway… I used to love going on holiday to Spain with ‘Pasitas’ and Greece with ‘Drachma’s’ ect ect… bring back the old days…
They might come soon enough… :s
Dave said:
ps: check my tweet on the current EURO action.
OK, I’m going to show off my ignorance a bit here…
I assumed the 1.2050 option barrier would no longer be valid since options expired already for the day. No?