Exotics for retail ?

Discussion in 'Options' started by IV_Trader, May 10, 2008.

  1. could you be specific? Do you mean the amex FROs or something more?
  2. yes , FRO.
  3. JKG


    interesting... but looks like there is not much volume yet. when did amex launch this product?
  4. it's not that new....you know they have this type of options on forex right? Been trading this type of options on forex since 2003. In forex, you bet that a currency pair won't hit a certain level or that it will move past a certaing level. Ex. US/EUR: I'll bet $500 that it won't go past $1.6000 before May 31, and then the program calculates then tells me to put up premium of $450, where I make $50 if the US/EUR doesn't move past $1.6000 before May 31.

    I'll only make $50, because with the US/EUR at $1.5644, the odds of moving 4000 basis points in 2 weeks is low....Now it seems they are moving onto the equity options which isn't a bad idea, but it is more gambling now, and it gives the market an edge over individual players.