Does anybody here trade any form of exotic options? I wanted to trade some knock-out options like double-barrier. When I trade an option, I usually have about what price it is going to, what range, and in a specified period of time. With vanilla options, I can't capitalize upon this knowledge. Barriers make the option even cheaper. Can I trade these through IB? Who else?
When someone talks about direction in regards to exotic options (even soft exotics or vanilla) then that is a surefire giveaway that one has no clue what one is talking about. Do you have a firm grasp of all the standard and higher order risk metrics that pertain to the options under consideration? Because if not you are not even a trader but a degenerate gambler and clueless punter. And no, IB does not offer "trading" in "exotic options".
Actually, best way of using most exotics (vol exotics excluded) is directional trading. There are people that made whole careers out of trading down-and-out puts.
You mean 1 in 100 or 200 derivatives traders? Nobody to my knowledge ever traded even vanillas directionally. At least not in professional space.
You mean sell-side, right? Most options traders on the buy side are directional traders in one or another way. It's very difficult to generate meaningful amounts of alpha by trading delta-neutral vol, since vol is usually pretty efficiently priced (aside from pure risk premium harvesting). It's especially true in light exotics where the client such as myself is willing to pay whatever vig the exo desk will charge me to get the right risk profile. The idea is almost always that the exo desk will be looking at it from delta-neutral perspective, while I put it on as a directional trade.