I have been milling around babypips for years but seen very few threads hardly any on the subject of vanilla Options. Instead just a billion unscrupulous posts on binary Options… Well, don’t get me started because I have made several attacks against the idea that I just gave up. If the SEC and the entire banking sector considers binary a scam, then it probably is.
Traditional Options have their roots firmly in the stock market. I am sure we have all heard the terms FEB 50 CALL and PUTS, Straddle, The Greeks and so on… The bottom line is vanilla Options have been a around for a while they offer low risk trading for traders and most of the time, if you can get the premium right, then you are going to make money. Recently, one of the guys, who joined my proprietary trading club, said to me he made 16k on binary and the company won’t pay him (fluke he reckons but he was really throwing cash behind it), I said to myself, if only this poor guy, new about proper Options trading. In any case we have a lot of material on vanilla Options in our members area, so we were glad to help him.
Traders don’t realize that the Options market is huge even in the interbank market and accounts for a lot of market volatility we experience in the spot market. In fact the NY 10am Options expiry is still an important piece of data. Anyway, I thought I will open an FX Options thread, as the guy who brought the discussion of volume to babypips supported by Pipme and Jason from FXCM, why not bring something else that helps traders? And I hope, those experienced Options traders contribute to it. Also, if you digging for more info pop over and register free at Traders Club London, we have loads of free content on FX Options.
In my opinion, Options offer low risk with the trader always knowing their loss but have potentially unlimited upside before expiry. I think this is great for struggling traders and new ones, especially now that the cash markets are ever so volatile.
I look forward to responses and ideas, I myself will contribute my knowledge on the matter. Thanks guys.
Hi Emerald, how is the Traders’ Club? Yes, options can really work in favour of traders, regardless of market direction… I am not quite ready to learn about options… Someone else might? Thanks for posting this!
It is going really well better than I expected, a few hundred members now. So I guess we are saying something right. I have been on and off with babypips as you can imagine my schedule is hectic and I still have to make time for my loved ones. Thanks for asking.
Hi guys. In the world of Options, we are firmly looking at capable. I was very bearish on Cable even at 1.5400. I am not at all surprised to see 1.5080, I think we should all start looking closer at the 1.4850 level and start thinking about hedging shorts or simply going for a straight Call Option trade @ 1.4850 14-20 day Call for a .5% strike (1.4900), possible 2% volatility from the strike (1.5100) before expiry, generally volatility at the swings have been 4-5% so on a rally at those lows I am generous. Long-term don’t rule out 1.4200.
You can watch the analysis video here. Great weekend everyone.
Well I decided to resurrect this thread because no one is talking about FX Vanilla Options. In fact I delta hedge a lot in the FX spot markets on some of my trades. So in any case it is time I gave you good people some proper direction in this area. I have been absent from babypips a lot due to my busy days, the markets don’t keep the wicked at rest.
It’s all free so let’s start a real discussion on Options and more for us all to learn. Well, I have 21 day Call Option on USDJPY, well I am already up 15% of the premium. I am expecting higher Implied volatility into 111.00 areas, so being an at the money call, I should get a good impact from Vega on my premium value. I exercised my Call Option on Cable 4 days from expiry I had strike of 1.4494 but the decreased volatility was killing my premium and then Wednesday happened I exercised at 1.4636, I was just lucky so I walked with a higher premium from what was a sure losing trade 4 days from expiry, my theta had also eroded the premium. I guess no one can predict implied volatility :21:
I hope there are more real Options traders here. Not that binary nonsense please.
Take out my latest short dated Vanilla Option play. I have this expiring tomorrow 10 NY cut. So I have no Theta impacts, so that should give me nice room in the event volatility picks up. My risk is limited to the premium, so as long as we can trade this morning lows I should be quite happy by the end of today. These are US Options so I can exercise whenever. This was an OTM (out of the money put on Sterling). See my thoughts on the link.