OANDA's Box Option

[riskarb]

For those of you trading with Oanda -- check out their forums re: box options. Made the mistake of depositing LLC funds this week. That check has been stopped.

It was phenomenal offering while it lasted... immediate touch exotics and deferred, atm inverted bets on 16 major/minor pairs. There was nothing like it available on interbank; let alone the ability to trade minute-durations.

They've neutered their markets by implementing null vol on no touch -- infinite vol on touch. It's akin to placing an rfq on an IBM 100 call and the DPM coming back with, "uhhh, we're a little short-handed right now... how does a nickel bid at one thousand sound?"

The simulation platform is showing correct pricing when modeled against fenics and SD... so they're advertising robust vols on their game/simulation platform but not on the live platform.

 

[riskarb]

I was just logging in to start a thread on the subject... I was in the process of clearing 7-figures with Oanda and now find that they're making 3-5% payouts on all structures -- near term and deferred, inverted boxes [atm deferred starts = hit = short gamma // atm deferred = miss = long gamma]. EVERYTHING is paying out at negative for <40d and no more than 5% for strikes under 1 sigma.

By pricing these touches at 5% they're essentially scrapping the entire concept... there aren't option-markets at Oanda."

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"Oanda has essentially removed box options from the platform by implementing zero-vol on miss and infinite-vol on hits... akin to making a market of "1% x100%" vol on the applicable touch exotic, the effect is the same as simply not offering the product at all.

I was in the process of moving substantial LLC funds to Oanda primarily for discrete carry and the ability to hedge our carry matrix with high frequency.

It's obvious that Oanda can't handle the risk of making a market in gamma/vega bets, hence the absurd "markets" in their binaries.

Bye Oanda.

Riskarb
CK Partners"

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"It's obstructionist. I understand Olsen is reticent to make markets in a product that is difficult to hedge discretely. The risk to Olsen is not the NFP-gamblers.

They entered into this fiasco with two diametrical conditions:

1) How can we white label the technology and NOT offer it to our loyal clients?

2) Assuming the above; how do we handle the the incidental gamma risks that aren't worth the trouble of replicating with our banks?

Olsen wasn't ready to see any kink in his equity curve, for better or worse...

Anybody with access to bloomberg pro should email me at riskarb at gmail dot com for further info."