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.
He decided to purchase $10 Billion of puts and calls options by using all their funds assets as collateral. George Soros was willing to gamble everything on a single bet.
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.
The value of British pound plunged. George Soros gamble paid off. He is now famously called the Man who broke the Bank of England.
Daily more than $3 trillion are transacted in the currency markets. You as a forex trader can profit from the volatility in the currency markets using a number of methods. Forex options is one of the methods
Spot, futures and options are three contracts that are traded on centralized exchanges and available to you as a retail forex trader. Swaps and Forwards are two more contracts traded in forex markets for hedging by large institutions like big banks, multinational corporations and off course hedge funds.
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.
In case of a forex options the underlying asset is the currency. Now, forex options give you the right to purchase/sell a certain amount of a particular currency on payment of a premium.
You may or may not exercise your right to buy/sell the currency. If the market price of the currency is above/below your strike price, you can buy/sell that currency by exercising your option.
In case, the market price is not above/below the strike price of your forex options contract, you can simply let the options contract expire. You only lose the premium that you had paid for purchasing the options.
If you want to try forex options then there is a very good forex options strategy that lets you profit regardless of the direction in which the currency market is moving.
This forex options strategy guarantees 30-50% ROI sure shot profit for you. If you feel satisfied with this much return you need to take a look at this method. - 23159
He decided to purchase $10 Billion of puts and calls options by using all their funds assets as collateral. George Soros was willing to gamble everything on a single bet.
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.
The value of British pound plunged. George Soros gamble paid off. He is now famously called the Man who broke the Bank of England.
Daily more than $3 trillion are transacted in the currency markets. You as a forex trader can profit from the volatility in the currency markets using a number of methods. Forex options is one of the methods
Spot, futures and options are three contracts that are traded on centralized exchanges and available to you as a retail forex trader. Swaps and Forwards are two more contracts traded in forex markets for hedging by large institutions like big banks, multinational corporations and off course hedge funds.
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.
In case of a forex options the underlying asset is the currency. Now, forex options give you the right to purchase/sell a certain amount of a particular currency on payment of a premium.
You may or may not exercise your right to buy/sell the currency. If the market price of the currency is above/below your strike price, you can buy/sell that currency by exercising your option.
In case, the market price is not above/below the strike price of your forex options contract, you can simply let the options contract expire. You only lose the premium that you had paid for purchasing the options.
If you want to try forex options then there is a very good forex options strategy that lets you profit regardless of the direction in which the currency market is moving.
This forex options strategy guarantees 30-50% ROI sure shot profit for you. If you feel satisfied with this much return you need to take a look at this method. - 23159
About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. 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 @ 5:58 AM
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