Forex Options Strategy
Have you heard about George Soros; The legendary manager of Quantum Hedge Fund who had made a cool $1 Billion profit from a single bet. In the early 1990s, one day he was sitting in his office discussing currency markets with his associate. Both of them were of the opinion that the British pound was overpriced and Bank of England could not sustain its price for long.
Acting on his hunch, he told his associate to purchase $10 Billion put and call options on British Pound and German Mark. It was a huge bet. He was in fact swaggering all the assets under his control on a single bet that may or may not pay off.
His knowledge of the currency markets was perfect. He was sure that his conviction that the Bank of England cannot sustain the overpriced British pound would come off right. Soon other currency speculators also joined. A huge selling pressure on British pound developed. Bank of England could not sustain the selling pressure too long and in a matter of 24 hours had to take British pound out of the European Monetary System and let it float freely.
British pound plummeted in the currency markets. George Soros had won his bet. He became famous as the man who broke the British pound with his pictures in all the famous newspapers and magazines.
Forex markets are huge. There are many ways to profit from the volatility in the forex markets. A number of trading vehicles are available for you to try in the forex markets.
You as a retail forex trader can trade any one of these contracts: spot, futures and options. Two more contracts are traded in the currency markets primarily for hedging by large institutions like banks, corporations and hedge funds. These are forwards and swap contracts.
Lets discuss trading forex options. Options are derivative products that give you the right to buy or cell or certain underlying asset at a predetermined price known as a strike price before or on a certain date known as the exercise date.
The underlying asset in case of the forex options is the currency. Now, forex options give you the right but not the obligation to purchase/sell a certain amount of a particular currency on payment of a premium.
When will you profit from purchasing a forex options? If the market price of the currency is above/below your strike price, you can buy/sell that currency by exercising your option of buying/selling the currency at the strike price and make a decent profit.
However, in case, the currency market price is below/above the strike price of the forex options; you need not exercise your right to buy/sell. By not exercising the forex options contract, you only lose the premium.
There is a very good forex options strategy that lets you profit from the currency markets in whatever direction it is moving. You can profit regardless of the direction of the market.
This is a risk free method but it only guarantees 30-50% ROI. If you are satisfied with this much sure shot return you can try this method. - 23199
Acting on his hunch, he told his associate to purchase $10 Billion put and call options on British Pound and German Mark. It was a huge bet. He was in fact swaggering all the assets under his control on a single bet that may or may not pay off.
His knowledge of the currency markets was perfect. He was sure that his conviction that the Bank of England cannot sustain the overpriced British pound would come off right. Soon other currency speculators also joined. A huge selling pressure on British pound developed. Bank of England could not sustain the selling pressure too long and in a matter of 24 hours had to take British pound out of the European Monetary System and let it float freely.
British pound plummeted in the currency markets. George Soros had won his bet. He became famous as the man who broke the British pound with his pictures in all the famous newspapers and magazines.
Forex markets are huge. There are many ways to profit from the volatility in the forex markets. A number of trading vehicles are available for you to try in the forex markets.
You as a retail forex trader can trade any one of these contracts: spot, futures and options. Two more contracts are traded in the currency markets primarily for hedging by large institutions like banks, corporations and hedge funds. These are forwards and swap contracts.
Lets discuss trading forex options. Options are derivative products that give you the right to buy or cell or certain underlying asset at a predetermined price known as a strike price before or on a certain date known as the exercise date.
The underlying asset in case of the forex options is the currency. Now, forex options give you the right but not the obligation to purchase/sell a certain amount of a particular currency on payment of a premium.
When will you profit from purchasing a forex options? If the market price of the currency is above/below your strike price, you can buy/sell that currency by exercising your option of buying/selling the currency at the strike price and make a decent profit.
However, in case, the currency market price is below/above the strike price of the forex options; you need not exercise your right to buy/sell. By not exercising the forex options contract, you only lose the premium.
There is a very good forex options strategy that lets you profit from the currency markets in whatever direction it is moving. You can profit regardless of the direction of the market.
This is a risk free method but it only guarantees 30-50% ROI. If you are satisfied with this much sure shot return you can try this method. - 23199
About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in investing, options and forex trading. Read more about Forex Options Non Direction Trading System. Discover a revolutionary new Forex Robot
posted by X - Men @ 5:53 AM
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