Forex option expiry dates

Online trading has inherent risk due to system response and access times that may vary due to market conditions, system performance, volume and other factors. An investor should understand these and additional risks before trading. Options involve risk and are not suitable for all investors. Futures, options on Futures, and retail off-exchange foreign currency transactions involve substantial risk and are not appropriate for all investors. Please read Risk Disclosure Statement for Futures and Options prior to applying for an account.
*Low margins are a double edged sword, as lower margins mean you have higher leverage and therefore higher risk.
All commissions quoted are not inclusive of exchange and NFA fees unless otherwise noted. Apex does not charge for futures data, but effective January 1, 2015 the CME charges $1-15 per month depending on the type of data you require.

Forex option expiry.
Forex option expiry.
This is a discussion on Forex option expiry within the Forex forums, part of the Markets category; Hello fellow traders, Today I noticed that the 14:00GMT expiry of USD/EUR options seemt to act as some sort of .
Regarding expiry dates this should be "public information" or?
Since so far eur/usd action is like gluuuue. ;-)
Regarding expiry dates this should be "public information" or?
Since so far eur/usd action is like gluuuue. ;-)
I know very little about options so this is useful information But you mentioned a Tokyo and US cut time, is there a London time?
option one can trade is 7 days, which is strictly enforced by the sax platform.
itself. This poses some interesting questions:
later (when one can no longer trade the option now with 6 days left before.
expiration) something causes the market to move against me big time, I am.
I haven't actually traded any forex option on Saxo so I can't really say for sure.
that if I can no longer buy back my call to close off the trade and take the loss.
option pricing itself (not necesarily the underlying spot rate) could be done by.
the market maker & insiders to turn the tide against my position.

Getting Started In Forex Options.
Many people think of the stock market when they think of options. However, the foreign exchange market also offers the opportunity to trade these unique derivatives. Options give retail traders many opportunities to limit risk and increase profit. Here we discuss what options are, how they are used and which strategies you can use to profit.
There are two primary types of options available to retail forex traders. The most common is the traditional call/put option, which works much like the respective stock option. The other alternative is "single payment option trading" - or SPOT - which gives traders more flexibility. (Learn to choose the right Forex account in our Forex Walkthrough .)
Traditional options allow the buyer the right (but not the obligation) to purchase something from the option seller at a set price and time. For example, a trader might purchase an option to buy two lots of EUR/USD at 1.3000 in one month; such a contract is known as a "EUR call/USD put." (Keep in mind that, in the options market, when you buy a call, you buy a put simultaneously - just as in the cash market.) If the price of EUR/USD is below 1.3000, the option expires worthless, and the buyer loses only the premium. On the other hand, if EUR/USD skyrockets to 1.4000, then the buyer can exercise the option and gain two lots for only 1.3000, which can then be sold for profit.
Since forex options are traded over-the-counter (OTC), traders can choose the price and date on which the option is to be valid and then receive a quote stating the premium they must pay to obtain the option.
There are two types of traditional options offered by brokers:
American-style – This type of option can be exercised at any point up until expiration. European-style – This type of option can be exercised only at the time of expiration.
One advantage of traditional options is that they have lower premiums than SPOT options. Also, because (American) traditional options can be bought and sold before expiration, they allow for more flexibility. On the other hand, traditional options are more difficult to set and execute than SPOT options. (For a detailed introduction to options, see Options Basics Tutorial .)
Here is how SPOT options work: the trader inputs a scenario (for example, "EUR/USD will break 1.3000 in 12 days"), obtains a premium (option cost) quote, and then receives a payout if the scenario takes place. Essentially, SPOT automatically converts your option to cash when your option trade is successful, giving you a payout.
Many traders enjoy the additional choices (listed below) that SPOT options give traders. Also, SPOT options are easy to trade: it's a matter of entering the scenario and letting it play out. If you are correct, you receive cash into your account. If you are not correct, your loss is your premium. Another advantage is that SPOT options offer a choice of many different scenarios, allowing the trader to choose exactly what he or she thinks is going to happen.
A disadvantage of SPOT options, however, is higher premiums. On average, SPOT option premiums cost more than standard options.
There are several reasons why options in general appeal to many traders:
Your downside risk is limited to the option premium (the amount you paid to purchase the option). You have unlimited profit potential. You pay less money up front than for a SPOT (cash) forex position. You get to set the price and expiration date. (These are not predefined like those of options on futures.) Options can be used to hedge against open spot (cash) positions in order to limit risk. Without risking a lot of capital, you can use options to trade on predictions of market movements before fundamental events take place (such as economic reports or meetings). SPOT options allow you many choices: Standard options. One-touch SPOT – You receive a payout if the price touches a certain level. No-touch SPOT – You receive a payout if the price doesn't touch a certain level. Digital SPOT – You receive a payout if the price is above or below a certain level. Double one-touch SPOT – You receive a payout if the price touches one of two set levels. Double no-touch SPOT – You receive a payout if the price doesn't touch any of the two set levels.
So, why isn't everyone using options? Well, there also are a few downsides to using them:
The premium varies, according to the strike price and date of the option, so the risk/reward ratio varies. SPOT options cannot be traded: once you buy one, you can't change your mind and then sell it. It can be hard to predict the exact time period and price at which movements in the market may occur. You may be going against the odds. (See the article Do Option Sellers Have A Trading Edge ? )
Options have several factors that collectively determine their value:
Intrinsic value - This is how much the option would be worth if it were to be exercised right now. The position of the current price in relation to the strike price can be described in one of three ways: "In the money" - This means the strike price is higher than the current market price. "Out of the money" – This means the strike price is lower than the current market price. "At the money" – This means the strike price is at the current market price. The time value - This represents the uncertainty of the price over time. Generally, the longer the time, the higher premium you pay because the time value is greater. Interest rate differential - A change in interest rates affects the relationship between the strike of the option and the current market rate. This effect is often factored into the premium as a function of the time value. Volatility - Higher volatility increases the likelihood of the market price hitting the strike price within a limited time period. Volatility is factored into the time value. Typically, more volatile currencies have higher options premiums.
Say it's January 2, 2010, and you think that the EUR/USD (euro vs. dollar) pair, which is currently at 1.3000, is headed downward due to positive U. S. numbers; however, there are some major reports coming out soon that could cause significant volatility. You suspect this volatility will occur within the next two months, but you don't want to risk a cash position, so you decide to use options. (Learn the tools that will help you get started in Forex Courses Teach Beginners How To Trade .)
You then go to your broker and put in a request to buy a EUR put/USD call, commonly referred to as a "EUR put option," set at a strike price of 1.2900 and an expiry of March 2, 2010. The broker informs you that this option will cost 10 pips, so you gladly decide to buy.
This order would look something like this:
Strike price: 1.2900.
Expiration: 2 March 2010.
Premium: 10 USD pips.
Cash (spot) reference: 1.3000.
Say the new reports come out and the EUR/USD pair falls to 1.2850 - you decide to exercise your option, and the result gives you 40 USD pips profit (1.2900 – 1.2850 – 0.0010).
Options can be used in a variety of ways, but they are usually used for one of two purposes: (1) to capture profit or (2) to hedge against existing positions.
Options are a good way to profit while keeping the risk down - after all, you can lose no more than the premium! Many forex traders like to use options around the times of important reports or events, when the spreads and risk increase in the cash forex markets. Other profit-driven forex traders simply use options instead of cash because options are cheaper. An options position can make a lot more money than a cash position in the same amount.
Options are a great way to hedge against your existing positions to decrease risk. Some traders even use options instead of or together with stop-loss points. The primary advantage of using options together with stops is that you have an unlimited profit potential if the price continues to move against your position.

Forex option expiry dates

EURUSD 1.2300 strike expiry today rumored for good size .
. says the news headline, but how do you interpret this ? To.
understand fx options it is best to explain some of the conventions that all.
professional option traders know but is not necessarily, written down anywhere. The aim of this article is to level the playing field somewhat for the retail trader by discussing common procedures in the interbank fx options market.
Majority of the fx option flow is OTC (Over-the-counter),
which basically means that it is independent of any exchanges. While terms can.
be individual, in order to maintain liquidity there are a number of.
standardized conventions. Still, these conventions vary from currency pair to.
If you know a little about fx options, you have probably.
heard about NY cut-off which is 10AM New-York time . This is when almost all fx options are expired, especially for.
majors, but there are a few exceptions.
If you trade emerging market currencies you should know that.
for TRY, the cut-off is 12:00 London time, while for PLN it is 11:00 Warsaw.
time (normally 10 LDN), while for HUF it is 12:00 Budapest time (normally 11.
LDN). If you trade asian emergings then Tokyo.
cut is also quite frequent which is 1500 Tokyo cut (GMT+9). When you are trading JPY and its crosses with American or European.
banks, 95% of the cutoffs would be NY though. Out of the other lesser traded European currencies NOK, SEK, CZK and ZAR pairs use NY cut-off as well, although the option market is rather illiquid. For RUB and BRL the market is mainly focused for offshore cash-settlement against a pre-defined fix and as such these pairs have to be considered separately for their behaviour.
Another thing you should keep your eye on is daylight savings.
time . While DST is largely standardized across Europe,
has a couple weeks of difference. As such if you live in London.
and got used to that NY cut is usually 3pm.
London time (as NY is GMT-5). There.
will be the occasional time where you will have to watch out of DST timing.
difference and this will shift the NY cut to be 2pm.
OTC options in the inter-bank market are of the Europea n and deliverable flavour which means that they can be exercised on the day of the expiry only and if exercised the counterparties execute a spot transaction at the strike. Furthermore,
despite the fact that it is called NY cut, the actual process of exercising the.
options are usually done by London trading centers for most of the major banks.
as London still remains the main fx trading center due to its access for both.
early morning US trading hours as well as late Asian times. As the cut-off time.
approaches at 14:57pm in London, the banks with the long option position call.
their counterpart on Reuters dealing terminals to say whether they want to.
exercise their long options or not.
Lets take an example. Suppose LongBank is long an EURUSD.
call at strike 1.2300 for 100mio with counterparty ShortBank who has the.
reverse position. At 14:59:55 the.
spot market is trading 1.2307. If the trader is delta-hedged conservatively.
that means that before the option expires he is long 50mio EURUSD above 1.2300.
and short 50mio below. So if just before expiry he exercises the call by buying.
100mio at 1.2300 from ShortBank, he can immediately close down his position by.
selling 50mio at 1.2307 in the spot market. At the same time ShortBank is.
likely has the opposite position if hedged conservatively and everything is.
So why can option expiries cause the occasional sudden move.
in the market ? In the above example the main assumption was that the both the.
option holder and the counterpart have hedged their position conservatively.
This completely changes if one counterparty has options for speculative.
reasons. A customer, like a hedge-fund, does not necessarily want to hedge.
their exposure in the spot market, but rather they are looking to put an.
exposure on by using options. The said customer could for example trade with 3.
banks in 200mio each putting on the same position. At the time of expiry the.
market makers would need to cover a spot position of 100mio each in a short.
amount of time in order to make them delta-neutral causing a classical.
break-out in shorter time-frames. Larger speculative flow often appears on the.
CME group option exchanges . For speculators that want to remain completely.
anonymous, this is often the only route to build a large position.
Also quite often the ISM economic numbers often coincides.
with NY cut causing further volatility and uncertainty.
At-the-money volatility as an indicator.
Other than adjusting to the swings of the market, currency specific.
volatility data should replace VIX for most macro oriented traders. The.
negative correlation between stocks and VIX has been well known and similarly.
for most currency pairs there is a risk-on / risk-off parallel that can be.
drawn, especially for most emerging economies. While at-the-money volatility numbers for the short term indicate the implied speed of the spot movements, which is usually faster and more sudden in risk-off environments, risk-reversals (or skew) signify the strength of the correlation between the speed and the direction of the market.
one day you see a long-term breakout in both currency volatility and the spot, you may.
have to adjust your intra-day trading to take into account of that the long-term.
trend is now strongly dominated. AUD is a typical risk-currency that trades.
such way. One common trading setup is when after a substantial down-move and.
spike in volatility for AUDUSD over a period of weeks/months, further drops do.
not cause higher volatility and sometimes implied volatility may even decline,
signalling that the move is losing steam and a turn-around could be around the.
Finally volatility should also feed into most system or rule trading where take-profits and stop-losses are defined as fixed target. When volatility increases to double, it makes sense to adjust these limit orders accordingly, strengthening the system by adapting it to current and implied future market conditions. This will help you even when going into a quiet holiday season as well over Christmas as market volatility drops markedly or when volatility suddenly jumps like at the flash-crash as implied volatilities will tell you exactly by how much you are expected to modify your orders.
To sum up, for the savy trader, option market data could.
provide more than just an additional dimension for trading. However the order.
of complexity is much higher as one needs to take account day-light-savings.
times, economic releases, holidays and speculative flow. While this.
does not make a difference every single day, but there are a handful of.
times in a year, where the additional knowledge can create outlier profits.
making their month or even their year. Finally, if you trade a system or rule-set with fixed limit order distances then you would be well suited to adapt it by considering the current implied market volatility.