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Tag Archives: call option

After the majors ripped through the USD for a better part of January, I decided that it was about time the USD was oversold or too far beaten up, that it will shortly be time for a reversal.

I decided to buy three options as follows: –

USDJPY @ Call option expiring Friday, 2 March; strike at 108.83, premium at 1.10 and breakeven at 109.93

GBPUSD @ Put option expiring Friday, 2 March; strike 1.4313, premium of 150bps and breakeven at 1.4163

AUDUSD @ Put option expiring 16 February; strike 0.8113, premium of 72bps and breakeven at 0.8041

 

I sold off the GBPUSD put option at 1.3990 for a trading profit of 173bps.

I sold off the AUDUSD put option at 0.7790 for a trading profit of 251bps.

My USDJPY option is in trouble with spot at 107.15, the option may expire in early March worthless.  In any case, at the time when I bought the option I was prepared to part with the option monies, so it’s ok.

More importantly, these three option trades clearly demonstrate that we can’t win all the time.  What’s important is to follow and study the market, put our mark on it and wait for the market to come to us, however, we should always manage the risk parameters, if we don’t, chances of losing monies is imminent.

Now, I need to think about doing the reverse in the USDJPY, what do the rest of you think?

The USDJPY traded to a high of 113.29 on January 5th and then consolidated slightly lower, just below 113.00

On Monday, January 8th, USDJPY made another attempt to surge upwards, I decided to sell the option at 113.30.

A nice trading profit of 82yen!

During the last week and into the first week of January 2018, the US Dollar took a beating from all the majors.

On January 2nd when I opened up my computers and looked at the FX markets, the USDJPY looked yummy.

So I decided to buy a call option with the following details: –

Strike; 112.08

Premium; 40bps

Breakeven; 112.48

Expiry; Friday, January 12th

Let’s see what happens………..

I wasn’t sure whether the FOMC will turn out like the BOE last month, but there was sufficient buzz in the market to suggest that it could be a volatile event.

I decided not to stay up for the action but instead place some one day vanilla options with the following details:-

EURUSD Call Option; Spot 1.1762, Premium; 40bps, Breakeven; 1.1802

USDJPY Put Option; Spot 113.05, Premium; 38bps, Breakeven; 112.67

AUDUSD Call Option; Spot 0.7610, Premium; 21bps, Breakeven; 0.7631

Decided to square all the three options as follows: –

EURUSD at 1.1830 for a trading profit of 28bps

USDJPY at 112.61 for a trading profit of 0.6 yen

AUDUSD at 0.7634 for a trading profit of 3bps

This whole exercise turned a small profit of 36bps……………aarrgghh…………the whole event turned out to be a lacklustre event.

Ok, I am closing my books for 2017.

Will put up the final performance figures for 2017 shortly.

 

It looks like the two AUDUSD call options that I bought; one expiring tomorrow and the other one on December 14th will both expire WORTHLESS.

And I am going to be hit with a loss of 142 bps being the premiums paid upfront. Actually, at the start, I have already decided to risk the 142bps, so it’s okay but still sucks! Hahahahahahahahaha……………ok people………..alittle humour?!

This year end is proving to be really difficult to trade, maybe, should just close my trading books and call it a day for 2017?!

Then again, we have major potential events happening this month, will it bring with it high volatility given the lower trading volumes?

Let’s see.

As it turned out, the USDJPY never did have any legs, so the option expired with a loss of 0.30yen.

I am deciding to take a small punt and buy a one day call option on the USDJPY with the following details: –

Strike: 113.20

Premium: .030

Breakeven: 113.50

Let’s see.

I totally missed this………………SHOOT!

Looking at the Daily chart, I noticed that spot crossed the 200DMA on November 4th at 0.7697.

Does it mean that the AUD is heading for a protracted softening?

I have already bought two call options with breakeven averaging 0.7710………about 130 basis points away right now………….hmmmmm……..will I have a chance in the next three weeks for the AUDUSD to recover?

Let’s see.

Saw the low in the AUDUSD this morning and decided to add on to my earlier call option by doing another 1 month call option expiring Friday, December 14th with the following details:-

Strike at Spot: 0.7620

Premium: 72bps

Breakeven: 0.7692

Let’s see.

I feel that the AUDUSD is somewhat oversold, given the strong economy, strong exports, stable housing, low interest rates, good employment and great weather.

So I decided to buy a one month call option with the following details: –

Strike at Spot: 0.7665

Premium: 70bps

Breakeven: 0.7735

Currently, it is trading at 0.7700