Hello fellow traders, I've been trading spot FX for more than 10 years (3 years full time) and have a good understanding of it. Recently I was introduced to new a FX option trading strategy that looks very, very interesting. But since I have very little knowledge about FX options I just would like to reach out for some help to any FX option traders out there?! My first question is about forward points. As I understand all the FX options premiums are based on future price? For my new strategy, I still trade spot FX (not FX options, I just use FX options for data calculation and finding the edge) So since I enter trades on spot FX, do I need to add/subtract Forward point from the FX option strikes? And if yes, does the forward point calculation would be different if I go LONG vs if I go SHORT? For example. In spot FX if I Buy AUD/USD I get paid swap (the difference between two currency interest rates) so forward point for AUD/USD is negative value (since at spot FX you get paid from day one) Now, if I go short AUD/USD in spot FX I have to pay swap every day, does this mean the forward point for AUD/USD, in this case, is positive value? Hope it makes sense, Any help would be much appreciated, Cheers, Ivolux
Is your question this: are the premiums for currency calls and puts of a similar expiration date symmetrically priced across equal deltas from a single strike price? If so, I imagine the answer is no. A Sep 29 put on the QQQ that is 10 OTM costs about 3X what the Sep 29 call that is 10 OTM costs. Would imagine that options on currencies function similarly. Not sure if that's what you're referring to, but maybe it helps.
Thanks for your reply, I was more thinking about how to translate option pricing to FX spot price? Currently, my options trading platform is showing me breakeven price (strike+premium) say at 1.1250 on EUR/USD for July options. But I need to calculate the Fx Spot price, for this 1.1250 options breakeven point,
Pretty sure there are options value calculators available on the web that will show you that. So you might search google. If you are searching for the actual equation that produces the numbers, somebody else is better suited to help you.