Liquid option markets for betting against EUR

Discussion in 'Options' started by paulrberg, Jun 29, 2020.

  1. paulrberg


    I'm interested to buy out-of-the-money options against the EUR, in order to be exposed to a massive payoff in case the EUR crashes against USD. So far, I found the following products:
    • XDE, that trades on Philadelphia Stock Exchange (PHLX)
    • Options on FXE
    The issue with both is that liquidity is thin, especially in the wings. Spreads are as wide as 0.1$ apart.

    Now, if EUR does crash, I'm pretty sure that it will bring down the major European banks with it. I'm looking at the likes of Deutsche Bank and BNP Paribas. My only concern with shorting them is that these folks have offices around the globe, so they're not fully exposed to the EU.

    What do you think is a good, liquid option market for betting against EUR?
  2. traider


    options on futures 6E but it's not very liquid.
  3. paulrberg


    Yeah, that plus options on futures are quirky. Some exercise physically, others in cash, depending on the expiration month.

    I'm looking for a simple, liquid product that will surely go down with the EUR.
  4. guru


    Options on EUR currency/futures.
    Not very liquid but I usually get the price I want, around the mid.
    $0.1 spreads on anything are actually quite good. I trade complex LEAP option combos with spreads larger than $10 (sic!) and get filled near the mid price. Spreads don’t mean much if you decide on specific price (usually near the mid) and get it.
    paulrberg likes this.
  5. xandman


    Times must have changed. If that is not liquid enough, then probably nothing is. It was a leading CME Options product decades back.
    paulrberg and guru like this.
  6. guru


    Exactly. I was just as confused with $0.1 spreads being bad or illiquid. WTH do people expect? :)
  7. Nighthawk


    How about OTC FX option market? $1B clip size no problem.

    But then, the real question is - are you ready for $1B clip sizes? :D:D:D

    and BTW - here is a paper on the matter:
  8. paulrberg


    Thanks guys, your comments were all very helpful.

    I'm not a seasoned trader, so I didn't know how to relate to the $0.1 spreads. I considered them high compared to SPY and other uber popular products.
  9. traider


    Yup the futures options are expensive considering EUR spot is very high volume with low spreads
  10. If you are looking for options against EUR then you must know that it is not very liquid.
    #10     Jul 3, 2020