I usually build up spot positions (long term ones) and "hedge out" some exposure during market consolidation and attempt to catch the bigger "trend". Once in a position I again hedge it to protect what I have but using box options. usually these are 7 days plus options but I also find you can long volitility (short term) when the market starts to get jumpy. I have no idea how to model an option. I brought that financial engineering exotic options someone mentioned and its good. I might look for a simpler one and i have found it i will keep you posted (OP).. when i get it I used dailyfx as well. they publish whats availible (option wise). I view them and find few are decent. Thats why I like oanda as I can pretty much get what I want and i'm not playing against someone whos job it is to beat me. personally i hedge spot with boxes as oposed to the other way round. I've tried the hedge options and it can be a major headache but looks worth it if you have the time/experience. /end brain fart btw nice to see you here 4_q
might be a bit pricey; it's used by a vast number of banks and also buy-side players. www.superderivatives.com I will add that I am slightly biased, as I did consultancy work for the company for nearly 5-years, but it is the de-facto benchmark for option pricing. BE LUCKY!