Can someone who trades options, please explain me, what does it means, when a new afloats in the market such as Options Expiring for Eur/Usd at 1.2750 How does it affects the Spot Market ? What does it mean by the expiry ? Does it mean spot price need to go in that level, meet the expiry of option, and than the price will go upside or downside. Appreciate your detailed response. thanks.
that means that the settling price for euro dollars is 1.275 meaning 1.275 dollars equals 1 euro dollar. options, if you have the 1.25 strike it is in the money and the 1.30 strike is out of the money.
Options have an expiration date (usually the 3rd friday of the month; like was the case today). The above statement just says at exactly the expiration time the price was the said value... ie. the "closing price" of the said options (or of the underlying "asset")... Take a look at this one: http://finance.yahoo.com/q/os?s=FXE&m=2012-12-21
1,275 is the strike PRICE not the expiration DATE . The price of the option does not affect the underlying but its affected by it . take a look here to learn the basics on options http://www.investopedia.com/university/options/ to see quotes go http://www.cmegroup.com/trading/fx/g10/euro-fx_quotes_globex.html (press opt) or go http://tinyurl.com/bbxhosz
Ok, But does it affects the Spot Price? When we get such news in the news feed. Does it like the Spot price will be than moved in the direction of the strike or away from it ?
Now, I just got a message like this EUR/USD Offers - 1.2780 Bids - 1.2700 Vanilla option expiries - 1.2720 So what does this mean.. and how it affects spot price.. Will it go near 1.2720 ? or away from it.
You are right option expiries are something different http://www.forexlive.com/blog/tag/option-expiries/ http://www.forexlive.com/blog/2012/11/01/option-expiries-updated-45/ There is an explanation in a comment It might be that these options are American options so ptions @ this price can be exercised. You should rephrase your question so we can get the answer from a more experienced forum member .