Forex OTM Options: Who Trades Them? Who Offers Them? And How Much Do They Cost?

A

achilles28

I know. Vauge questions for a complex topic.

My interest centers around near expiry, vanilla options.

Specifically, Im looking for general prices for At The Money (ATM), Out of The Money (OTM) and Deep Out of The Money (DOTM) currency options (buying calls and puts) for GBPUSD that expiry within 1 to 3 days.

I've combed a few forums seeking 'ballpark' premium and strike prices regarding such options but couldn't find a hint.

I realise option prices are constantly in flux with changing market and volatility conditions. So generalizing premiums for near expiry ATM, OTM and DOTM options in an unspecified market is difficult if not impossible.

Im just looking for a rough pricing estimate. Just a whiff. I havent a clue whether premiums for near expiry GBPUSD ATM options in a non news environment are 50 pips or 200 pips.

My questions:

What is the average premium paid for a GBPUSD ATM option expiring in 2 days? In a non news environment? Rough estimate?

What difference between the strike nad underlying must a GBPUSD option exhibit before it can be considered Deep Out of the Money? Assuming said option is expiring within 2 days in a non news environment? Ball park?

How much would you guess that premium would be on the GBPUSD DOTM option if it were to expiry 2 days from the time of sale?


I hope my questions were sufficently precise to allow general comment?? If they wernt perhaps I could post a few recent dates and times im seeking prices for?
 
I guess only a handfull of people trade forex options.

Not surprisingly, after combing the web only CFOS, FXCM and SAXO offer forex options.

Commissions and premiums are very high on Deep Out of The Money and OTM calls and puts 24 hours from expiry. Like 8 - 10 pips commission (80 to 100 bucks) not including premiums Very high.

Im considering looking into future options. Perhaps a better deal due to increased competitive pressure and marketplace demand?
 
A couple of suggestions.

First, a weekly (Monday) report from dailyfx / FXCM that I recently posted a heads-up to here. Their options trade ideas are usually exotics, but you can (and will probably want to anyway) set up your own vanilla spreadsheet, using their IV figures. Here's the latest piece from Feb. 12th.

Also, have you already looked at the actual premiums of exchange-listed options on futures, on the CME website?
 
On the pricing I have seen the spreads will kill you.
I too am searching for a low cost / low risk basis for trading FX options.
If you find one Im all ears.

I am looking to replicate a trading system I use writing covered calls protected by LEAPS. Returns are astronomical (close to 300% per annum) and if the system can be applied to FX Options returns should eclipse anything that can be done in the sharemarket

Good hunting:cool:
 
I continue to feel the best way for fx options is the exchange traded route, cme. stat vols are often slightly higher than implieds so it is a different animal than the equities.

a covered leap system might work in a directional capacity.
 
Quote from late apex:

A couple of suggestions.

First, a weekly (Monday) report from dailyfx / FXCM that I recently posted a heads-up to here. Their options trade ideas are usually exotics, but you can (and will probably want to anyway) set up your own vanilla spreadsheet, using their IV figures. Here's the latest piece from Feb. 12th.

Also, have you already looked at the actual premiums of exchange-listed options on futures, on the CME website?
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Hey man. Thanks for getting back to me.

I havent checked out CME (yet). Will check it!
 
Hey OffshoreLawyer,

I've heard IGmarkets.com will make markets on custom options (non standard expiries).

Havent had time to check them out.
 
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