hello fellow traders, recently i started a bearish position in the euro dollar buying a put option on the June contract, strike 1.060 bought on may 1 at the 0.0038, the cash was trading at 1.090. Today the cash is around 1.085 and the option is listed around 0,0022. So only few working days passed, hence the time depreciation shouldn't affect the value that much...the volatility now is even higher than may 1 the cme is a pretty liquid mkt for these, how come they are pricing that badly?
These are currency options, not stock options. IV can go down at the same time as the underlying goes down.
Unfortunately for you, vol really moved against you... As someone already mentioned, it's related to the French election. Strike vol on the 1st of May - 9.34%, strike vol now - 7.45%. There's also some theta, obviously.
yeah probably it is the volatility, have to say that still don't understand how the price contributors compute it....regardless many readings, is it about expectations and not about recent price range move?
After the election, there were more sellers of these relatively low-delta EURUSD puts than buyers... Et voila!