FX Options / FX OPTIONS / Ask Steve

FAQ: Debit spreads or credit spreads, which is better?

Admin — Wed, 28 Apr 2010 11:27:22 GMT

Question: Debit spreads or credit spreads, which is better?

Steve's Response: According to options pricing models, there should not be any preference to credit spreads or debit spreads. Many traders tend to like credit spreads since they are receiving money, but, in theory, they are paid slightly less due to the cost of money. Traders need to be aware of the risk/reward relationships between debit call spreads and credit put spreads and credit call spreads and debit put spreads. These relationships should be about equal, considering the cost of money (with identical strike prices). Traders need to be comfortable with whichever strategy they select. Personal preference might play a role in deciding if debit or credit spreads make more sense for you.

Skews of USD/CHF, ISE symbol SFC 8/23/10 and USD/JPY, ISE symbol YUK

Steve Meizinger — Mon, 23 Aug 2010 16:53:35 GMT

The USD/CHF (ISE symbol SFC) and the USD/JPY (ISE symbol YUK) are both exhibiting “smile-like” characteristics. The options smile has neither a volatility bias to the downside or upside. Longer dated options, the December term, are much more symeterical than any other month.

Volatility

MHS — Mon, 19 Jul 2010 02:05:32 GMT

Hi Steve,

I am new to options trading, prior to options I have been trading the foreign exchange market exclusively and in particular the AUD/USD spot rate. I consider myself to be a chartist and have been quite successful in the past. However, In June 2010 I suffered a huge blow to my confidence in trading when I lost a total of 20% of my trading capital in 2 days. Ever since then I have postponed my trading and am trying to learn of ways to manage my risk more effectively and I am intrigued to the use of options to transfer risk. I was just wondering, how do you obtain data on historical volatility and implied volatility? From what I have read, historical volatility is the actual volatility that coincides with the current price of the option, however, implied volatility is not as black and white as that. I was just wondering, is there any software or calculations that can assist me in determining an accurate implied volatility rate for a given option or is it more artsy and requires some estimations and guesswork?

Regards,

Marco Susilo

American Style Option VS Europeon Style Option

joshuaexcavating@yahoo.com — Fri, 02 Jul 2010 14:51:16 GMT

Is there a market "broker" for American style options for US retail clients? I have found many brokers for the European style, but for the American style.

Follow up question on BRL - Bond hedge

bond — Tue, 15 Jun 2010 14:57:19 GMT

Dear Steve,

please excuse my very limited knowledge of FX Options but would I not buy PUTS instead of calls, for example if I have a potion of BP
( which thanks to GOD I do not ) and I am afraid it will go down I would buy a PUT on BP to hedge,..when buying calls on BRL I would earn money if BRL goes up and US$ down, so for example if BRL raises from 1.78 ( current ) to 1.75 to the US$,- as our bond position will pay us back in BRL and we need to cover a credit line in US$, if BRL looses in value we get less US$ than we need to cover the credit, so a falling BRL against the US$ is the problem we like to cover,..

We could also sell a covered call - and earn the premium - but that might be a problem as the expiration of the bond trade does not go inside with Option expiration.

One more question is ( please ) what number of puts / calls I need to buy to hedge my position for each 1 mill US$ worth of BRL bonds as the currency of settlement is always US$ with BRL bonds
such as the KFW bonds,..

Is there a chance to talk to you Steve - phone ? Before we open an account - happy to pay for your advice,..

many thanks

BOND

Real FX Option to hedge Bond position

bond — Mon, 14 Jun 2010 00:54:20 GMT

Steve, I am new to FX options, I am planing to buy a bond in Real that pays a nice coupon and like to hedge my currency risk US$/Real as I am borrowing the US$ to buy the bond - the bond expires in Mid 2012 - so NDF's ( that I am considering ) are mostly offered for just 1 year, - so I would need to roll them over 2 1/2 times - or I could use BRL options, buying PUTS to hedge the currency risk - what do you suggest is the best strategy here ?

kind regards

BOND

FAQ: What are the trading hours for FX Options?

Admin — Wed, 05 May 2010 13:07:40 GMT

Question: What are FX Options trading hours?

Steve's Response:

Beginning April 30, 2010, trading in ISE’s currency options will open at 7:30 a.m* (New York Time). Trading will close at 4:15 p.m. ISE is extending trading hours to attract participants who are active in the foreign exchange markets prior to ISE's current 9:30 a.m. opening time. The extended hours will appeal to a broader range of foreign exchange traders, especially from the UK and other countries in Western Europe, and ISE's FX options products will benefit from additional liquidity during peak FX trading hours.

*market orders will not be accepted between 7:30 a.m.-9:30 a.m (New York Time).

Q&A: What are your commission rates for taking options?

Admin — Tue, 01 Jun 2010 14:47:46 GMT

Question: What are your commission rates for trading equity options and options on futures contracts?

Steve's Response: ISE is fully electronic options exchange, trading options on equities, indexes, ETF’s and currencies. In order to trade at ISE, you will need to open an account with an options broker. Brokers such as Schwab, Fidelity, Interactive Brokers, optionsXpress, TDAmeritrade and TradeStation are among a few of the many brokers that you can trade ISE FX Options through. Commissions are determined individually be each broker. Please feel free to contact a broker to identify if they meet your specific needs. www.fxoptions.com/brokers

currency option trading

num13 — Thu, 20 May 2010 10:05:17 GMT

Hi,
I am a student at the HUMBOLD Universty - Germany, and have do do presentation about currency option. So i whant to show my fellow students, how you can trade such options. I cant find a platform that i can use to show this.
Please help.
Thanks

FAQ: How important is Open Interest and Volume in Measuring Liquidity?

Admin — Wed, 05 May 2010 13:57:35 GMT

Question: How important is open interest and volume in measuring liquidity?

Steve's Response:

You should be concerned with the market quality and not volume or open interest. Liquidity is best measured by the quoted spread and size, and not by volume or OI. Volume and OI are just secondary indicators of liquidity. After all, your trades are against the quoted bid and offer. All FX Options quotes are widely available through your broker and through www.FXOptions.com/quotes.

FAQ: Using FX Options to Hedge Currency Risk with British Pound

Admin — Fri, 21 May 2010 15:34:34 GMT

Question: How can I use FX options to hedge currency risk? I am borrowing in British Pounds, converting to U.S. to lend - then selling USD to British pounds for payment to the bank. I have a good understanding of options and strategies, but have not applied them to FX before. Would like to know contract specifications (how many ATM calls to purchase to hedge $1M, - margin requirements to create synthetic long positions.

Steve's Response: Our FX contracts control 100 * the pair value amount. For example EUR/USD might be 1.35 *100 creating an FX index value of 135.

One contract controls approximately 100 * 135, or $13,500 USD. (Each ISE symbol controls a different notional value)

Considering a 1M USD portfolio, you would need 1,000,000/13,500, or about 74 contracts to hedge USD movement.

If you wanted to hedge with an ATM option with about a 50 delta you might look at the 135 calls/puts ITM calls/puts would offer a lower deductible with higher costs. OTM calls/puts would offer even lower costs relative to ATM and ITM with much higher deductibles associated. Since the product is EUR/USD calls hedge Euro strength, puts hedge Euro weakness. We have contracts that are either USD based or quote, use whichever convention that you are most comfortable with, whether it's the euro or pound relative to the USD.

Option Prices

balmy66012 — Fri, 21 May 2010 11:15:36 GMT

Can we expect that the same option at different brokers will have the same bid and ask? Are some brokers more liquid that others? What are the key things I should look for when deciding which broker to use?

Thanks,

B

What is up with the EUI Options today?

fuzebear — Tue, 18 May 2010 17:17:54 GMT

I am watching the EUI Jun 77.5 Call option today and the spread is crazy? What caused this? Can somebody explain? The bid is 2.22 and the ask is 5.00. It is not the only call option. It looks like the spread on all the options less then 78 are really large.

European Style Options

balmy66012 — Thu, 28 Jan 2010 14:27:07 GMT

Steve,What is the purpose or benefit of trading european style options? I see it as a disadvantage since it can only be exercised on one day. How do we take profits before the option expires?Also, how do I trade options on GBP\JPY or EUR\JPY?Thanks,B

FAQ: Having Debit and Credit Positions Simultaneously for Diversity?

Admin — Tue, 04 May 2010 13:55:00 GMT

Question: Is it a good idea to have both debit and credit positions on at the same time for diversity? What ratio would you recommend?

Steve's Response:

Diversification is a good strategy, but using too many options strategies that conflict with each other might not be the preferred method. Using “x” number of debit spreads and “y” number of credit spreads might not give you better results. What you may want to consider is how a certain strategy could react to changing market conditions (price, time, volatility, etc). Similar trading results can be achieved by trading debit or credit vertical spreads depending on your own market viewpoint and given certain risk/reward tradeoffs.

FAQ: What Happens if the Trade Turns Against You?

Admin — Thu, 22 Apr 2010 11:49:22 GMT

Question: Can you give us some tips on how to manage the trade if it starts to move against us, and what consideration you give to the Greeks?

Steve's Response: Traders should seriously consider a “Plan B” strategy, what happens if the trade turns against you, how will you react? When using the “greeks,” one of many methodologies you might consider is to determine which of the “greek” risk measures are giving you the most risk and watch those most carefully. For example if you select an in-the-money spread, delta might give you the most risk, if you select an at-the-money or out-of-the-money spread the vega, gamma and theta might be the primary “greek” concerns.

FAQ: Calculating the best risk and reward ratios when using spreads

Admin — Tue, 20 Apr 2010 11:05:53 GMT

Question: Is there a formula you use to account for the probablity of winning vs just max loss to max profit?

Steve's Response: No, there is no set formula to calculate the best risk reward ratios when using spreads considering maximum loss relative to maximum profit. When trading options, and when using the spread strategy specifically, traders should consider the likelihood of the maximum loss as compared to the likelihood of the maximum gain. There is never one “right” options spread strategy, traders must make their own choices based on their view of the market considering their own risk tolerances and their own financial goals.

FAQ: In FOREX we can't do spreads within the USA. In the UK I can. Are spreads legal in the USA?

Admin — Thu, 15 Apr 2010 11:39:06 GMT

Question: In FOREX we can't do spreads within the USA. In the UK I can. Are spreads legal in the USA?

Steve's Response: ISE is fully regulated exchange, all trades are cleared through the Options Clearing Corporation, the largest options clearing organization in world. Please do not confuse “spread betting” that is offered in the UK with spread trading that is available at ISE. All you need to access the ISE is an equity options broker account The ISE offers fully displayed actionable quotations from all market participants, including multiple market makers that provide ample liquidity for traders. The depth and integrity of the US financial markets are a real benefit for traders, especially during market turbulence.

FAQ: Implementing a Stop-Loss Order on Spreads

Admin — Wed, 14 Apr 2010 17:31:45 GMT

Question: Do you put a loss on spreads?

Steve's Answer: Each trader should consider the risk/reward tradeoffs for any options strategy. One of the benefits of vertical spreads is the limited risk (there is limited reward also) offered by the strategy. The decision to implement a stop-loss order on spreads is a personal choice. Whether you choose a debit or credit strategy, traders may want to consider the maximum loss/profit on the spread and use risk/reward ratio in your consideration of a stop-loss order.

FAQ: Guidelines for Deteriming Contract Sizes

Admin — Tue, 06 Apr 2010 16:54:51 GMT

Question: Are there any guidelines for determining the appropriate number of contracts to purchase. Are there standard contract sizes for those listed under the dual convention?

Steve's Response: The contract size can be calculated by multiplying by the pair value by 100. For example if USD/CAD (CDD) is trading at 102, the notional value is $10,200. Similar calculations can be made for the other pairs. The contract size will float slightly with the exchange rate.

Margin Requirements for Writing Options

vypa — Tue, 30 Mar 2010 16:29:35 GMT

Hello,

I have combed through the site here looking for margin requirements to write an option and have been unable to come across any information in that regard.

Are there minimum margin requirements to write FX options, and if so where can I view that information?

Thanks,
John

FAQ: Choosing an option chain in or out-of-the-money

Admin — Wed, 31 Mar 2010 14:27:55 GMT

Question: What is the thought/strategy process for choosing an option chain more or less in or out-of-the-money?

Steve's Answer: The selection of strike price is based on the trader's view of movement considering cost. A good analogy would be insurance deductibles. A lower deductible on your car insurance means that your insurance premium will be higher because covered for more losses. Similarly, a strike that’s closer to the money will cost more.

FAQ: FX Options treatment for tax purposes

Admin — Wed, 31 Mar 2010 14:22:22 GMT

Question: FX Options traded on the ISE (exchange) are treated as equity options or as future options as far as taxation is concerned?

Steve Meizinger's Answer: Yes, FX Options are similar to equity options, until they receive 1256 status. Please consult with your tax professional.

Liquidity

bluewings — Thu, 25 Mar 2010 12:28:35 GMT

Hi Steve,

Can you explain if there is any liquidity issue for FX options? I see that the open interest is zero for almost all strikes for a lot of currency pairs. I also suspect that almost all liquidity I see is coming from market makers. For example AUM, we have 150 contracts for both bid and ask for strikes that have zero open interest.

Thanks.

FAQ: Webinar Archives

Admin — Fri, 12 Mar 2010 15:26:59 GMT

Question: Are you webinars archived for later viewing?

Steve's Answer: Yes, our webinars are archived the following day and posted on www.fxoptions.com/events. We have a full list of all of our archives. No registration is required. Are webinars are also converted into video podcasts. Feel free to subscribe at www.fxoptions.com/university.

FAQ: Vanilla Options Strategies

Admin — Fri, 12 Mar 2010 15:21:11 GMT

Question: Questions about strategies, I am used to vanilla options, who do I call and at what number can I reach them?

Steve's Answer: Plain vanilla options are the straightforward option contracts traded at the ISE. They are not one touch, two touch, or barrier options, but are simply defined by strike price and duration, either call or put. All ISE trading is executed electronically. You just need to open an account with a broker. Following is a list of just a few of the brokers available: www.fxoptions.com/brokers

ISE offers complimentary educational webinars every week on various topics, including different strategies you can employ. Feel free to sign up at www.fxoptions.com/events.

American style or European Style?

Mubala — Wed, 03 Mar 2010 19:37:10 GMT

Hi Steve, I am happy to have found this site and also discovering forex options. My main concern is are FX options american or european style?Best regards Malvin

Buying Call Option For The Euro For The Long-run,

ronaldvanbell — Tue, 02 Mar 2010 15:22:38 GMT

Hey everyone,It is my belief that the Euro is oversold right now.Anyway...I've been looking for a call options on the euro (vs USD).apparently, the two possibilities are the CME or the globex exchanges.Didn't find anything else.Now, I also find no volume from september and further at both of them, only march and june - 3 month timeframe.look at the volume area:http://www.cmegroup.com/trading/fx/g10/euro-fx.htmlI'd really like to find call option that could be use for the long term - 6-9 month from now. (preferably European style)Anyone knows how to do it?Ron

Virtual Trading Contest Results

tomterfx — Fri, 12 Feb 2010 07:49:01 GMT

Any way to see the trading records of the top contestants that just completed the Virtual Trading Contest on 2-10? And possibly their equity curve for those 30 days? Can we email them questions or find out if they post on other trader forums? Thanks!

Using Options to Hedge Market FX Positions

tbuitendyk — Fri, 29 Jan 2010 01:47:00 GMT

Hi there Steve -- I'm wondering if I can ask you for help with setting-up a specific options-based position hedge?(I apologize in advance for the length of this post, it is a somewhat specific and complex issue I'm trying to resolve. If you know anyone else that could provide insight to this problem that I'm trying to solve, it would be most appreciated.)I have written software that generates signals for the GbpUsd pair. I'm currently running the software live on a $32K account and a $14K account and it seems to be working quite well. Recently I've been able to generate a trading methodology with my software that in backtesting looks very positive. Basically what I've found is a set-up that allows the software to enter both long and short on cable in the exact same entry signal and have a very very good winning percentage. In fact, in back testing, this double entry set-up wins on both sides 100% of the time in 6 months and it does not carry a negative equity float.The problem is that this configuration requires fairly large potential stop-outs -- 475 pips on the "normal" side and 560 pips on the "contrarian" side. ("Normal" may be short or long, depending on the nature of the signal, I call the "contrarian" side the opposite entry - the point is that the set-up always wins on both sides in back testing.) Due to the nature of the trades, these stop-out sizes need to be multiplied by in effect about 5.2 - 5.5 or so open positions on the side that is stopping out, so the net effect is a large number of pips down the drain. So many that if this was more than a twice or so a month occurrence the account would even move backwards.So far in live and back testing, the system wins 100% of the time. It's hard to believe but true (at least so far -- if you want to check out a non-hedging version of it on MyFXBook I can link it for you.) The maximum size win result on each side, which happens on each side approx. 41% of the time, is approx. 235 pips. (This is total pips won, not distance travelled from the "master" (initial) order placed with a trigger. With this set-up each trigger can open up a master and another 5 additional more favorable positions per signal per side.) The minimum size win on each side, which happens approx. 44% of the time, can be as low as only 20 pips per side - but generally only one side wins this low at a time if at all. The remainder of the time the wins are somewhere in between these values. (I just provide this detail to give you a context.)Given the frequency of the trading, my problem is that if and when my system generates a bad trade and stops out with a loss on one side (only one of the sides can stop in loss at a time), by my calculations it will take on average approximately 2 weeks to recover from such a loss. I've been exploring options with the intent of trying to limit down side loss.I've come across something that is called an "equity collar" that uses out-of-the-money protective puts on long positions and out-of-the-money protective calls on short positions, each of these funded with out-of-the-money sales of calls and puts. The idea which you are probably familiar with is to create a zero-cost boundary around the underlying currency positions which will reduce the effective maximum stop-out value on the positions to something like 200 pips or so (which would again be multiplied by 5.x but not nearly as bad as 475 or 560 pips.) The positive side of the move would be limited to probably an absolute amount 100 - 150 pips or so above the main entry point of the primary position in the set, but as the system generally does not move much beyond about an "absolute move" of 20 - 50 pips above the initial position's entry point, this should not really be a problem (most of the win value is made by picking-up draw-down "slave" positions controlled by the initial "master".)I am trying to figure-out the most cost effective way to set-up these option contract positions. Not being very experienced with options, really don't have any great ideas about the timing around closing the options sets, etc. Perhaps the fact that the system is working both sides of the underlying cross and there are (at least for a time) balanced positions underneath, I could take advantage of that with the options set-up. The current idea that I'm playing with looks like:buy 3 week calls at entry point plus 150 pipssell 3 week calls at entry point plus 100 pipsentry point: long & short positions in underlying crosssell 3 week puts at entry point minus 100 pipsbuy 3 week puts at entry point minus 150 pipsBecause both sides of the underlying cross set-up can add drawdown positions the contract sizes that I'm playing with are large enough to handle the full load of positions that might be opened.Am I totally out to lunch here? Is there a better way to do this? Am I missing something? My experience with options is so minimal I really don't know if I'm missing something obvious or missing the forest for the trees, so to speak. Really am seeking guidance from someone that works with these things more than myselfI would appreciate any insights you or anyone else could provide!Thank-you -- Theo B.

FAQ: How is the settlement value determined for FX Options?

Admin — Fri, 15 Jan 2010 17:05:15 GMT

Question: How is the settlement value determined for FX Options?

Steve Meizinger's Response: Settement value is determined on the last trading day (usually a Friday) based on the WM/Reuters intraday spot rate corresponding to 12 noon New York time. Settlement values are available at www.fxoptions.com/quotes.

FAQ: Calculating Your Payoff

Admin — Mon, 04 Jan 2010 13:51:31 GMT

Question: I had a question on the USD profit from these options. Please let me know if the following is correct: If I buy 1 AUM call with strike 100 and it settles at 105, I make $5 USD. If I buy 1 AUX call with strike 100 and it settles at 105, what is my profit? Is it 5 USD, or is it 5/1.05 = $4.7619 USD?

Steve Meizinger's Response: ISE offers an Australian dollar contract in either a AUD base currency (AUM) or AUD quote currency (AUX). Think in terms of the base currency, if you are bullish on the base you might purchase calls (or sell puts), if you are bearish on the base you might purchase puts (or sell calls). To calculate your payoffs diagrams at expiry you should consider the AUM or AUX value relative to the strike price that you selected. If you purchased an 100 AUM call and AUM settles at 105, the contract would be cash settled at $5 per contract *100 or $500 per contract. If you purchased an AUX call the methodology would be exactly the same, except AUM and AUX would move in inverse directions. If the USD rallies AUX will rally, AUM will decline. If the USD declines AUX will decline, AUM will rally. You can select the appropriate calls or puts based on your market forecast for the particular currency pair.

FAQ: What size account do I need to trade FX Options?

Admin — Mon, 04 Jan 2010 13:26:08 GMT

Question: What size account do I need to trade FX Options? What is smallest size FX Option i can buy?

Steve Meizinger's Response: The size of the ISE FX Options product depends on the underlying value. Assuming EUR/USD is trading at 1.45, the ISE value is 1.45 *100 or 145. The notional dollar value for EUU, assuming an exchange rate of 1.45 is 100 * 145 or $14,500 per contract. The contract size will “float” based on the underlying exchange rate. Calculations for the other pairs can done using a similar methodology. Options allow tremendous versatility. There are many uses of options, a few of the more popular options strategies are: limiting risk (through the use of calls or puts), targeting income, or even forecasting future volatility with option volatility strategies. The choice of the options strategy, and the strike price(s) selected help determine the trade-offs between risk and reward.

To learn more about ISE FX Options, please sign up for our ISE educational webinars at: www.fxoptions.com/events

FAQ: Underlying Values of FX Options

Admin — Mon, 04 Jan 2010 13:21:30 GMT

Question: What is the underlying value of a fxoption. f.i. uee 145. is this EUR 1450 or EUR 14500?

Steve Meizinger's Response: Assuming EUR/USD is trading at 1.45, the ISE value is 1.45 *100 or 145. The notional dollar value for EUU, assuming an exchange rate of 1.45 is 100 * 145 or $14,500 per contract. The contract size will “float” based on the underlying exchange rate.

To look-up quotes or use the options calculator, visit www.fxoptions.com/quotes

FAQ - How much will it cost to buy an option?

Admin — Mon, 04 Jan 2010 13:14:11 GMT

Question: Can you tell me how much will it cost to buy an option of GBP/USD for one month?

Steve Meizinger's Response: The cost of options are based on six factors: the underlying price (the ISE pair value exchange rate), strike price, time left until expiration, interest rates of both the base and the quote currency’s and the volatility of the underlying price (the ISE pair value exchange rate). These factors change each trading day, creating trading opportunities.

Looking at the ISE FX options a moment ago, the GBP/USD (ISE symbol GBP) the pair value was 159.97 (these prices change each trading day). The 160 strike call and puts were quoted as follows:

Calls Puts

January 160 1.46-155 1.52-160

February 160 2.91-3.07 3.00-3.15

Of course there are many other strike prices to select from.

Settlement value

SteveBrown — Fri, 01 Jan 2010 22:37:48 GMT

My question concerns the value of an ISE FX option at expiration. I understand the settlement value is based on the exchange rate in the spot forex market at noon, New York time, on the day of expiration. Say I have one CDD (USD/CAD) call option with a strike price of 105. At noon on the day of expiration, the USD/CAD exchange rate is 1.07, so the settlement value of the contract is 107. To calculate the actual value of the contract, I take the difference between the settlement value and the strike price and multiply by 100. So the actual value of the contract would be (107-105) x 100 = $200. Is this correct?Say I do not sell to close the position, but just let the contract expire. Does a settlement automatically take place, and $200 is added to my account balance by my broker? Or do I have to sell-to-close the position before expiration, in order to realize the profit?

FAQ - What Broker provides trading for FX Options?

Admin — Thu, 10 Dec 2009 11:08:29 GMT

Question: What broker provides trading for the FX Options?

Steve's Response: Any broker that handles equity options is enabled to facilitate transactions in the ISE FX Options market. Brokers such as E*Trade, Schwab, optionsXpress, Interactive Brokers, Trade Monster, and TradeStation can handle the transactions, to name just a few. www.fxoptions.com/brokers.

FAQ: Selling FX Options

Admin — Thu, 10 Dec 2009 11:02:18 GMT

Question: I want to know if I can sell puts on FXoptions? The purpose of selling of a put on a currency is that I can collect the premiums and I wouldn't mind buying it if its put to me. At least I didn't pay full price for it. Other than that I don't see the benefit of having to spend money to buy options. In the spot market I get paid with overnight rollover and I get better leverage. More leverage doesn't mean you have to use all your leverage but you have a much larger unused margin, therefore less likely for a margin call.

Steve's Response: FX Options offer tremendous flexibility with multiple options strategies available, including spreads with up to four legs. If you are targeting income, selling options might make sense. Please take into account that if you sell puts on the base currency, you are obligated, but not guaranteed, to purchase the underlying value. Conversely, if you sell calls on the base currency you are obligated, but not guaranteed, to sell the underlying value. The specific details of the rights and obligations are based on the strike price selected and the expiration month chosen. ISE FX Options are cash settled at expiration, there is never any physical settlement of any of the foreign currencies.

Trading Strategies: Bearish view on U.S. dollar

TraderJoe — Tue, 08 Dec 2009 15:09:25 GMT

What type of trading strategy should I implement if I have a bearish view on the U.S. dollar but want to limit my risk?

FX Options Hedging Strategies

TraderJoe — Tue, 03 Nov 2009 15:58:25 GMT

What type of options strategies should I implement to hedge against currency exposure?