Anyone tried trading news on FX options? Trading the spot market is not possible because of spread widening on news break but what are your experiences with FX options during news release? Which broker do you use for FX options trading?
I haven't tried trading news events on FX options (only now dipping my toes into the options markets) but I would expect the spreads would snap open similar to the spot market. My broker: Saxo Markets
There is a crucial difference between the two, in FX Options the orders are directly sent to CME Futures, while spot trading is done through a broker who is free to widen your spread to reduce informed arbitrage against the broker.
As i mentioned, I'm new to options but I would expect that market makers would clear their book a second or 2 before any major release (I will be very happy to find out that I'm wrong here) to reduce their own exposure. What broker are you currently using?
I don’t think it’s about clearing their books, your position with a broker is always hedged unless the market moves so fast that the broker wasn’t able to hedge in time and take a loss, I believe that’s why they wide spread during news release. No such problem exists with CME FX Futures Option.
I’ve traded FX options around news releases, and they can offer a smoother execution compared to the spot market, especially during volatile events. For brokers, I’ve had success with, LQDFX, IG and Saxo Bank for FX options trading.
Does Saxo Bank take US clients? I looked at IB and their FX options are only through Philly Exchange not CME, do you know which brokerage offer CME FX options?