Italian debt crisis and Option Trading

[Martinghoul]

Quote from dudij:
Martinghoul:

What do you think of a general play on the EURO as a proxy for trading options on Italian debt.

While researching this, I've found the FXE is highly liquid and has tight bid-ask spreads, so good for option trading.

I'd think of opening a long straddle over the next 1-3 months.

What do you think?

I think it's very difficult to make any assumptions about the relationship between Italian debt and the Euro. As to buying straddles, I don't know whether that's a good idea or a bad one, since it will depend on what vol's like. In general, EURUSD vol is pretty high, so your straddles probably aren't gonna come cheap.

 

[trading spaces]

BTP future on IB symbol BTP, no sign of an option on the future. There used to be an option on future BTP contract back in the Liffe floor days.

 

[Martinghoul]

Quote from trading spaces:
BTP future on IB symbol BTP, no sign of an option on the future. There used to be an option on future BTP contract back in the Liffe floor days.

There are no options on the Eurex Euro-BTP contract at the moment.