User Name: Password:      Register - Lost password?
Search In...

         A Live Learning/Help Forum
             VIDEOS -
                 Mov Avgs (6)
         Currency Futures
         Market Terminology
         Posting a Forum Chart
         Trade Execution
         Trade Management
         Trading Fundamentals
             Economic Indicators
             Flows/Central Banks
             Risk Aversion
         Trading Psychology
         Trading Technicals
         Trading Techniques

         Module 1: The Basics of Forex Trading
         Module 2: The Logistics of Forex Trading
         Module 3: The Logistics of Forex Trading Part 2
         Module 4: What Moves the Forex Market
         Module 5: Trading the US Dollar
         Module 6: Trading the Euro
         Module 7: Trading the Japanese Yen

  VIDEOS: Trading Basics
         Module 1: Technical Analysis Basics
         Module 2: Chart Patterns
         Module 3: Technical Indicators
         Module 4: Candlestick Chart Formations
         Module 5: The Psychology of Trading
         Module 6: Money Management
         Module 7: Position Sizing
         Module 8: Intro to Fundamental Analysis
         Module 9: Economic Releases that Move the Markets
         Module 9a: Pulling It All Together

  Help/Learning Forum Topics

Found In....
Category Name: Topics
» Sub-Category Name: Options
Options Impact On FX
By: Global-View

This is from an exchange in the Global-View Help Forum:

tor pumpkin 18:30 GMT October 20, 2008
Grahma, sorry for the slow reponse.

You are correct, options are relevant to spot, but it is only part of the picture, and you need to know a lot of the various parts or else make a lot of assumptions in order to complete the picture. I have cut and paste something I wrote for Jay several years ago. (And yes I feel rather dated seeing “2002” behind that post).

tor Pumpkin 17:32 GMT January 25, 2002
Gamma is the second derivative of the option price w.r.t. spot.

It defines what a market maker has to do in the spot market as spot fluctuates (to manage his/her delta position).

If we are long gamma (which usually means long vol, i.e. long an option), as spot goes lower we buy, and as spot goes higher we sell: so buy low, sell high. This dampens the move (lowers volatility).

If we are short gamma (short vol / short an option), we buy as it goes higher, sell as it goes lower. Buying into the highs, selling into the lows causes exaggerations of spot moves.

This effect is especially noticeable if the option being hedged is short dated.

So it’s important to know how the market makers are positions as one can count on them to dynamically delta hedge rather predictably. What we don’t know is whether the client is delta hedging. Is the client another market maker? Is the client a corporate hedger? In which case, it’s highly unlikely they will delta hedge. Is the client a hedge fund or SWF who does delta hedge? Possibly, not always, sometimes religiously.

So your cut/paste about EURCHF is somewhat useless to me (as it doesn’t say how market makers are positioned). Your example about GBP vols are of no importance to spot. It is merely stating the level of vols.

Typically I use the strike comments as “something to tuck in the back of my head” but rarely trade off it

And yes, ATM is always ATM forward.

London Graham 13:40 GMT October 17, 2008
I'd like to ask a question regards Option info in relation to Spot prices if I may?

I know what an option is, but I don't really know how to use the data or even if it’s worthy of note for retail purposes?
What influence do option expiries and strikes have on the movement of spot prices?
Should I expect price to move towards or away from strike as we approach expiry time (usually NY cut) & should/could it influence orders/trades I'm looking to make?

am example of said info:

"FX OPTIONS: EUR/CHF Large 1.5270/75 expiries today. A cumulatively estimated EU1bn of 1.5270 and 1.5275 strikes reportedly roll off at today’s 10am Eastern NY cut"

Am I to assume EUR/CHF is going to move towards 1.5270/75? or maybe away from it (so as not to hit strike price)?

What about something like the following:

"FX OPTIONS: GBP/USD 6-mth ATMF Vol Firms, Now Pivoting 14.9% . 6-mth ATMF vol is currently indicated at 14.75/15.1, having been 14.5/14.9 at today’s London open."

I'm sure this is valuable information; I just don't know how to use it or even read it? Can you help?

- I believe ATMF means "at-the-money forward"?
- I trade spot, not options. But I believe this options info is there for some reason relevant to spot trading, or am I wrong?



Actionable trading levels delivered LIVE to YOUR charts

GVI Trading. Potential Price Risk Scale
AA: Major, A: High, B: Medium

Mon 27 May 2019
AAGB/US- Holiday
Tue 28 May 2019
A 14:00 US- Consumer Confidence
C 13:00 US- Case-Shiller
Wed 29 May 2019
A 08:55 DE- Employment
AA 18:00 US- BOC Decision
A 18:30 US- EIA Crude
Thu 30 Mar 2019
AAEZ/CH- Holiday
A 12:30 US- Weekly Jobless
Fri 31 Mar 2019
AA 10:00 EZ- Flash HICP
A 12:30 US- Personal Income, Spending, Deflator
AA 14:00 US- Final Univ of Michigan

Global-View Affiliate Program

We are starting an affiliate program to market some of our products.

Send me an email if you would be interested or if you know someone who would like to be an affiliate. Generous commissions payout for those accepted.

Put the word "affiliate" in the email subject line.

Contact us

Start trading with forex broker Markets Cube


Retail Forex Brokerage Changing!

Are you looking for your first broker or do you need of a new one? There are more critical things to consider than you might have thought.

We were trading long before there were online brokers. Global-View has been directly involved with the industry since its infancy. We've seen everything and are up-to-data with recent regulatory changes.

Our Best Brokers listing section includes:Forex Broker Reviews, Forex Broker Directory, Forex Broker Comparisons and advice on How to Choose a Forex Broker

If would like guidance, advice, or have any concerns at all ASK US. We are here to help you.

SEE Our Best Brokers List

Currency Trading Tools

  • Live rates, currency news, fx charts. 

  • Research reports and currency forecasts.

  • Foreign Exchange database and history.

  • Weekly economic calendar.

Directory of  Forex trading tools

Terms of Use    Disclaimer    Privacy Policy    Contact    Site Map

Forex Forum
Forex Trading Forum
Forex Forum + forex rates
Forex Forum Archives
Forex Forum RSS
Free Registration

Trading Forums
Currency Forum Guide
Forum Directory
Political Forum
Forex Brokers
Compare Forex Brokers
Forex Broker News
Forex Broker Hotline

Forex Trading Tools
Currency Trading Tools
Forex Database
FX Chart Points
Risk/Carry Trade Chart Points
Economic Calendar
Quicklinks to Economic Data
Currency Futures Swaps
Fibonacci Calculator
Currency Futures Calculator

Forex Education
Forex Learning Center
FX Trading Basics Course
Forex Trading Course
Forex Trading Handbook

Forex Analysis
Forex Forecasts
Interest Rate Forecasts
Central Bank Forecasts

FX Charts and Quotes
Live FX Rates
Live Global Market Quotes
Live Forex Charts
US Dollar Index Chart
Global Chart Gallery
Daily Market Tracker
Forex News
Forex Blog
Forex News
Forex Blog Archives
Forex News RSS
Forex Services
The Amazing Trader
Forex Opportunities
Forex Affiliates
Forex CopyTrading
GVI Forex