I dont want the volatility/margin calls of a trading platform so was looking for an ETF for the above. None are offering this particular pair - can short against GBP or USD but not CHF. Any ideas how I can set this up without the margin or volatility? Cheers.
Hello,
If I may ask: based on ‘what’ are you so convinced that shorting it is the the thing to do??? I’m just curious is all. I’m not saying you’re wrong. Just curious. However: if you look at the monthly and weekly charts it could go either way i.e. it’s been higher before and there’s no reason for it to not to reach those levels again before MAYBE dropping (and this would be particularly true if Gold keeps ‘marching on’ to new highs or Australia increases interest rates at some point).
As I said: just curious.
Regards,
Dale.
Dale, it’s a sceanrio play that I’m interested in due to potential upside.
No great analysis - trigger event based upon opinion. I’ve tried a trading platform and didn’t like it/don’t think it’s suitable for holding a position for a while (6 to 12 months). An ETF would be fine - I’m happy sit and wait. I’ve not got a lot of cash so have to be careful with trading charges.
Geez!!! I wish I had YOUR problems!!! LOL!!!
Well if you were to ask ME: I’d say to take a look at something like the Turtle Trading System (there’s a current thread where it’s being discussed right now as a matter of fact and if memory serves me correctly I attached the rules of the system too on that thread). That’s LONG TERM trading FOR SURE (I call it ‘tradevesting’). It may suit your needs. In addition and seeing as you’re unhappy with your platform why not give Deltastock a ‘bash’ (if you go VIA me then great but either way it’s ‘no big deal’) and I happen to know somebody who’s had certain positions open since LAST YEAR and they’re STILL open and ‘going strong’ so there’s no problem there either. Just a suggestion is all (and of course I have the system(s) coded for both Delta Trading, which is what I’d suggest, or MT4). There are two systems called (very originally) ‘System 1’ and ‘System 2’. ‘System 2’ uses a much longer lookback period but does it’s best to avoid the volatility and ‘noise’ that you mention. Of course there are LOADS of ETF’s available for trading too (but as you obviously know there is commission involved). Otherwise (maybe) you can look for a broker that offers currency futures (I only know of one that I have personal experience with and I’d not give them one GBP of YOUR money let alone mine but I do indeed refer to their currency futures charts now and then when called for).
Anyway: if I can assist you in any way (no matter which broker you ‘go with’ I’m happy to do so).
Regards,
Dale.
Edit:
In YOUR case you may even want to look at using the system(s) on the weekly or even monthly charts given that you obviously are not in a ‘hurry’ to make money (for those that have the necessary patience there is nothing as accurate at the LONG LONG term charts)!!! LOL!!!
Edit 2:
After having another look at AUD/CHF though: that’s a pretty ‘choppy’ pair you know??? Just an observation and I’m not ENTIRELY sure that my input and / or suggestion regarding the Turtle’s given above will ‘fit’ with this pair. Hmmnnn… Take a look at equities or commodities or ETF’s as you’ve suggested i.e. I’m sure you’ve seen how those things trend!!! Of course there are other systems that will get you ‘in’ a lot sooner (even on AUD/CHF) but they require a lot more maintenance).
Dale, I created a new thread with the following question (no takers so reposting here to ask if you’d consider):
I’ve never purchased an option before so looking for some advice. I’m thinking call option on CHF/AUD - for 12 months ahead. For example, say today’s price is 1.00 and my call is at 1.15 for £1000. I think the way it works is that should I be right and in 12 months time (or before) I pocket the difference of £1000 * 1.15 = £1150
If I’m wrong and the price bombs (no matter how bad) I do not have to buy. Two questions
(1) is the above right
(2) Can anyone give a ballpark of what I’d pay for the call option?
Hello,
I’d love to be able to help you but you’re asking the wrong person here i.e. other than Binary Options I don’t know my ‘a*se from my elbow’ when it comes to Options. I did read your other post in this regard but decided to ‘leave well alone’!!! LOL!!! Anyway: I will (right now) attempt to get a friend of mine who is a ‘kinda sorta expert’ on Options to post here with a reply for you (he used to post here regularly until he decided to trade Options exclusively).
The only other thing I could suggest is for you to contact somebody like ‘ThinkOrSwim’ (believe it or not that’s an Options broker) and maybe they could give the costs etc.
Regards,
Dale.
So people,
for my old friend Dale I cannot avoid making even what I don’t completely like. I am supposed to be the ‘kinda sorta’ and I don’t know whether this should be considered a compliment, LOL! I can say I have read and practiced enough with the subject, anyway…
I want also to clarify that I haven’t left this forum due to my change in interest (towards options, but absolutely not as exclusively as Dale believes). Rather, as I am still interested in forex and directional trading (yes, with options you can also make good profits in non-directional trades), I simply think the quality of this forum is quite low compared to others, and also the policies applied by the administrators. That’s it. (…and it was quite a story). And finally there are surely places and ways much better than forums overall for acquiring knowledge and market skills, starting from books and focused (and necessarily closed) collaboration groups.
Now coming to the question. The answer cannot be too short if it doesn’t want to be unpolite:
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The options you’re speaking about, FelixMc (AUD/CHF), if they even exist, are surely “over the counter” products, not traded on any regulated market. I must say I have no experience at all with OTC products, but in general I would absolutely warn anybody to play with such stuff. It’s a sort of casino: you must rely on the honesty of the broker/emitter/market maker and the like. And usual the financial market is a place constituted more of wolves than of lambs, you know…
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It is not really possible to understand what you mean with the numbers you give. Any option is simply a contract with some features. One is the kind: and in this case it’s clear you’re speaking of calls, instead of puts. These are contracts giving to the holder the right but not the obligation to buy, until expiration (the second feature you clearly state) a certain underlying (which is the instrument on which the option is based. And in your case: what does it mean buying AUD/CHF? Is this some asset? Would it mean that you will be able to buy AUD paying them in CHF???) for a predetermined price, called the strike. Of course, as you are making a contract with somebody, you must pay something for acquiring such right/contract. The option, therefore, has a price, which is called premium. In your post it is not very clear which is the strike and the premium.
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Just for being complete: the one is selling you the call (he/she is called the “writer”. He/she can be usually a market maker, but anybody can write options, and in this case the market maker will act as the buyer) has not the right, but instead is forced to sell you the underlying for a price corresponding to the strike, if you decide to exercise the option. And here, there are two kind of options: european options must be exercised at expiration, while american-type options can be exercised also before (i.e. within exipation). After expiration options have no value any more: they become pieces of paper (as natural, being them just contracts with a determined expiration). “American” and “European” style has nothing to do with the country of incorporation of the underlying. Simply, for instance, index options are European-style, while equities options, for instance, are American style. You must know which is the contract you’re dealing with, and I have no idea about this AUD/CHF. Of course, as at least “regular” options are traded, the owner has not to wait until expiration for exploiting them. He’s always free to re-sell the contract on the market, at the premium currently traded, as with other financial instruments. I never ever hold an option till expiration for exercising it. This is the way I think 99% of options are used (i.e., never kept the position open till expiration, unless you sold the options and they expire worthless).
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So: how it works, practically with them? Well: let’s say you sold a XYZ call, strike 50, expiration Dec2010. In selling it, you collected the premium from the buyer. How is this premium determined is a matter of the market and of a theory you should patiently study (it takes some months, at least), but it is real money. Then what happens? If XYZ at expiration (usually the third Friday of expiration month) trades at less than 50 (let’s say 49,76$), the option expires worthless in the hands of the owner. He will never ever exercise it, because this would mean for him to buy from you a lot (100 shares) of XYZ for 50$, while he could buy them directly on the market for 49,76$. The call, therefore, will have a value of 0. If instead XYZ trades at, say, $52, you as the writer are in a big trouble: the owner (actually all goes through a clearing house) will come, exercise his call, and you are obliged to sell him a lot of XYZ at $50, and buy it back in the market for $52. With a 100-sares lot this means you have lost $200. These $200 are called the intrinsic value of the option. And this also means that a call option, let’s say one minute before market close on expiration Friday, will have a premium (price in the market) of about $200, if XYZ is quoted 52$.
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So, trying to reply to your first question, assuming that you buy a call that has a premium of 1.00 and a strike of 1.15 (meaning AUD/CHF must be at 1.15 at expiration for your call having an intrinsic value at expiration), you will have to pay $100 (1.00 x 100, the lot controlled by a call, assuming it is of a “regular kind”. No idea for the OTC contracts: you must carefully read product description). Then, if at expiration AUD/CHF trades exactely at 1.15 you will get nothing, and therefore you just wasted money. If AUD/CHF trades at less than 1.15, you’re right: you’re not going to lose more than what you spent now for buying it. So, always 100$ (but remember: this is 100% loss on investment). For breaking even, you need that the intrinsic value of your contract is equal to the paid premium, i.e. $100. This means you break even when AUD/CHF is at 1.15 + 1.00 = 2.15. If it is at 2.50, for instance, you get an intrinsic value of 2.50-1.15 = 1.35, i.e. $135, and your net profit is 35$ = 35%. This is, I repeat, how regular options work. No idea about your exotic product.
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From the above it might look like that trading options is quite silly. Actually, a straight strategy as I described is really stupid, and no option trader (a real one) would make it like that. Premium of options contains, besides the intrinsic value, a time value, which accounts for the probability that, in the time remaining before expiration, the price of the underlying will really beat the strike. This time value simply gradually disappears while time goes on (this makes the job of writing options particularly attractive, if you think about). So: keeping and holding for a long time a call waiting that the price of the underlying simply reaches strike is a waste of time=money. Traders will buy such a contract just in the context of a spread or another hedging/hedged position, like a calendar spread or the like… Much to be learned here.
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Finally (finally for me too! :eek:) I would like you to consider the attached figure. It is the evolution of the S&P500 over several years with the evolution of the volume (in equities) traded in the direct stock market. The lower panel, instead, shows, over the same period, the evolution of the volume of exchanged options. Without a deep explanation, these figures demonstrate an important fact. Markets, nowadays, are moved by institutional investors operating MAINLY with OPTIONS and not with STRAIGHT CONTRACTS.
This is just to say that you’ll be better going out and study at least something about options. You might start from the Chicago Board of Exchange Options Institute (it’s free, after registration) [Please, administrators: this is a semi-public site, which has NO concurrent interest with yours. Don’t blame me for unwanted concurrent advertising! I have zero interests with them…] . It’s excellent. And the same is true for you, my valuable friend Dale. I never managed to convince you of that, after so many years. But think about: trying to (retail-) trade the markets without having at least an average knowledge of options is like a guy trying to regulate the level of the water of a lake with a cup, without realizing that the force really influencing this level is the balance between the incoming and the outgoing rivers. It should be a quite frustrating endeavour, don’t you agree??
Well, forex might has its peculiarity, being a spot and losely regulated market. But, if it’s true that there is a correlation between currencies and markets (and general macroeconomics), well, I think that even a forex trader who wants to become a professional retailer, should dedicate some serious, methodical and persistent effort to self-education. Probably it is not on forums like this one that this is possible. At least this is my personal conclusion.
Bye
fsprea
I am SPEECHLESS!!! I am without speech!!! LOL!!!
Would you believe: this is one of my (TRUE) friends (and the one to which I referred to FelixMc)!!!
Anyway: I hope ‘his lordship’ answered (at least some of) your queries!!! LOL!!!
Regards,
Dale.
Technical Analysis of AUD/CHF Dates 2014.12.19
AUD/CHF during the recent weeks was in an descending trend that Sellers were successful in reaching to the lowest price of 0.78295.The price has stopped from more descend by reaching to the support edge of down channel(also Monthly s3 pivot point) and a bottom price was created on the support line by the Sellers retreat.Right now the price level of 0.78295 is known as a bottom price by closing of the ascending candle.
As it is obvious in the picture below, there is a harmonic Bat pattern between the bottom price of 0.78295 and the top price of 0.87363 that there is a potential for changing price direction from D point of this pattern.Stoch indicator in daily time frame is in saturation sell area and confirms the D point of Bat harmonic pattern and make the potential for a price upside possible.Generally until the price level of 0.78295 is preserved, price will have the potential for reformation and ascending.
