Oanda just released Box Options for several pairs. What do you guys think about them? Total rip off or a fun alternative way to lose money trading? hey, we all know 90% of traders lose, might as well have fun while doing it!
I've played with them a little. For now at least I don't plan on using them. The payoff doesn't seem to match the purchase price and even a "miss" box has to be purchased. If I'm not mistaken you can't write or sell premium as with traditional options.
Why almost not a one forex trading website offeres plain vanilla spot currency options that can be bought & sold at any time?
A miss is a short premium exotic barrier option. A "miss" under the current spot-rate is a "no touch" put. There is no risk beyond the debit paid for the position, as the option is a "knockout" IOW, the option is worthless to the 'miss" buyer, and the "hit" buyer[OANDA] receives the debit should the "miss" strike be reached before expiration. A fixed debit and payout reflect the binary conditions; there is no risk beyond the debit req, and the payout is also bounded. In vanilla options it would be analogous to selling an otm vertical. So yes, you are short gamma[a lot of gamma] for a debit requirement.
I didn't like the odds either. Most of the time the risk:reward is less than 1:1. I second that. Why the resistance in offering vanilla spot currency options? Maybe they felt that people would just go to CME for those?
Options in the interbank market are OTC and the conventions are open. You can choose your strike to the pip and your expiration to anything from 1d to 365d. The logistics of the OTC model are daunting and the majority of these fx dealers are not that sophisticated. Those they do offer it are typically white-labels of Saxo's platform which offers OTC vanilla. They say they offer exotics, but it's a joke... when asked to make a market the canned response is always, "our exotics guy isn't here today..." UBS offers OTC vanillas and exotics.
What are normal risk reward ratios for standard FX options? Maybe hard to compare to the Oanda's Boxoptions offering, but any reasonable comparison would be appreciated.
very possible. a lot of BOM customers were saying they would invest more $ if only BOM had some financial backing/credibility.