Forex Options

jackieo79 said:
For FX options. on an exchange In smaller sizes (ie mini lots up to 200 at a time etc..) i like the Nadex spreads. But these are for short term intraday to 1 day trades only or for hedging like buy eur/usd sell a spread or sell eur/usd and buy a spread. So this may or may not suit your purposes.
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It does not suit any purpose because these are
(a) totally illiquid, since you can't really get a two-way on any of the binaries or spreads
(b) priced by the "exchange" at eggregious spreads plus get charged high execution fees
(c) not really protected by any sort of regulatory body and is essentially a bucket shop

If you are going to represent Nadex, please identify yourself as a Nadex rep rather then saying "I like X" as if you are an active trader. The OP would have better luck trading options on currency ETFs as opposed to being a price-taker on Nadex.
 
It suits a purpose. I trade it and do well enough on it.

a) liquidity -

already posted but..
http://screencast.com/t/fog47QNP Weekly

SPY ETF verticals most with less than 550 like the US 500 Binaries

http://screencast.com/t/vM0konwIhN

You can put a bid and offer inside the bid ask spread and make your own market or even become a market maker if you have the funds and experience which from what i have seen from you post you most likely do.

b) they are not priced by the exchange but by the market makers - the exchange is independent of pricing like CME etc.. the Nadex spreads are EXTREMELY similarly price to CME options I can post examples on Friday when both expirations line up if you would like... on the binaries though the spreads are sometimes wider than verticals etc.. this is not always the case... and the variable versus full payout more than compensates for this http://www.elitetrader.com/vb/showthread.php?t=281824&page=11

c) They (Nadex) are regulated by the exact same regulatory body that regulates the CME exchange. CFTC.gov

Me saying i like to trade Nadex spreads and binaries no more makes me a rep than you saying you "like google and its going up" makes you a google rep. Several traders in this one thread mentioned CME etc.. that does not make them CME reps. I trade everyday day and most nights :)

You made some cool points in the thread I learned about the similarities of verticals but in the end I do not see how verticals are better than binaries with all the evidence displayed. Currency ETF's limited hours, higher fees, less expirations and lower variable payout Discussed here in detail so no need to rehash it all http://www.elitetrader.com/vb/showthread.php?t=281824&page=11


Thank you for taking the time to layout clarifications on various points.

Jaclyn



sle said:
It does not suit any purpose because these are
(a) totally illiquid, since you can't really get a two-way on any of the binaries or spreads
(b) priced by the "exchange" at eggregious spreads plus get charged high execution fees
(c) not really protected by any sort of regulatory body and is essentially a bucket shop

If you are going to represent Nadex, please identify yourself as a Nadex rep rather then saying "I like X" as if you are an active trader. The OP would have better luck trading options on currency ETFs as opposed to being a price-taker on Nadex.
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in case nobody answered.

fx options ISE, PHLX (listed options). symbol
ISE: EUU, YUK.....,
PHLX: XDA, XDS, XDE....
these are options on fx spot not on fx futures.
 
CME has the FX options on their FX futures as well. ie at TD Ameritrade TOS platform.

Short strangles. If your a US resident- check out nadex binaries. They are also derivative of FX Spot. Open from 6pm to 5 pm on weeklies. Also there are daily and hourly expirations on fx.

The thing to consider is FX moving around the clock probably best to avoid a short strangle strategy where you can't adjust it during the evening (non NYSE hours) like on a FX ETF options. But with futures options should not be an issue also with nadex forex binary/spread options not an issue.

On the flip side - Long strangle/straddle - I prefer the their Spreads over the binaries usually but they are only hourly and daily no weekly but they are priced spot on with ie cme options. And are also available night and day.

If not in the US there are other choices also not sure of your location or how far out you are looking to do the strangle how much you want to adjust etc..are you gamma scalping etc.. etc..

Though this may really not be as technical as you where looking for. Liquidity... on Nadex look at the bid/ask size and the amount you are going to do that size stays pretty much the same so if that works for you then cool. On say cme or etf options - check out the open interest and volume and ensure you stay with say x percent 15% of open interest usually and 1/2 of the volume for easy entry/exit as a very "general" guideline.

Also compare all three side by side ETF, CME, Nadex etc.. see which risk/reward model etc.. works best for you account size strategy schedule etc...

Just a few ideas probably not the perfect answer but i hope it helps some.


daniel5198 said:
If I wanted to sell OTM strangles on currency, what vehicle would you recommend (in terms of skew and liquidity )?
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