Low Prob Events

ropunzel 2016-07-09 05:05:48 UTC #1

Are any of you familiar with FX Options trading. Because of Brexit, I was thinking about researching a new strategy around options trading low probability events.

But I have always been quite sceptical of options as a derivative effectively pitching me directly against the human, technical and financial resources of the option pricers, compared to a more open FX Spot market with a diverse range of participants each with different overall goals and timeframes.

FOREXunlimited 2016-07-09 07:20:13 UTC #2

W/ options trading, you can take a position that has no directional bias.

Look up straddles.
This strategy is very basic, can be implemented w/ a few hundred dollars in capital, and is very profitable.

lexys 2016-07-09 08:03:48 UTC #3

This has always been my perspective, too, but I agree with Jake (above) that straddles [I]clearly[/I] have potential, in principle. I strongly suspect it’s quite a big learning-curve, though (like most things, really?) and I’ve decided I don’t need it at the moment.

PipMeHappy 2018-01-28 07:45:18 UTC #4

Hello Ropunzel,

given what you said on the UsdTry thread yesterday I must assume that since a year and a half ago you have had time to research options (and consider Brexit implications) enough to decide to go ahead with using them, though not as a straddle in the way that ForexUnlimited had suggested.

Good luck with it all!
Happy Trading

ropunzel 2018-01-28 11:31:11 UTC #5

Greetings thanks for the post. I am going full wack on all asset classes at the moment, it was a mistake to focus on just FX which actually was only incident to some work opportunities that presented themselves a while ago.

If I did have the knowledge at the time, yes Brexit would have been a trade that I could have taken advantage of whilst retaining some sanity and the ability to sleep in the knowledge that my exposure was limited…

funny old game this, when you consider the flimsy spreadsheets people use to manage hundreds of millions AUM and the when the global head of research for a bulge bracket that makes a living out of providing data to hedge funds tells you that there is no sustainable edge in this market that he has seen.