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30/52
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You've most likely heard the phrase, 'time is money", and were convinced that this was a truth equal to law. Just as mathematics has its conventions that are not law-bound, so it is true about time equaling money. Simple, right? In this article, I explore some of the remarkable aspects of an investment universe with negative interest rates, so-called negative carry trade, and relate it to the time-value calculation in options pricing, as well as how we should understand the calculus in our overall trading.
If you trade options, you should be familiar with the options "greeks", one of those being time theta, the first-order derivative of the options pricing model. This calculation is an abstraction of what may be perceived as so-called time value decay. Those who are keen in math, are familiar with compound interest growth as well as decay in sociology and science fields. Because finance is mostly constricted to zero-bound limit investments, there isn't a practicing application of negative growth for compound. That simply doesn't exist in finance. However, as mentioned with the options calculus, financial options have a time value that inevitably decreases day by day. The greater t…
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pshan avatar
pshan 24 Mar.

thank you! why, I love your comments!

brilliant avatar
brilliant 24 Mar.

yes.I agree with you. life itself is a time

pshan avatar
pshan 25 Mar.

thank you! though that comment makes 0 sense in the U.S. brilliant!

ForexAlyoum avatar

Good Luck

Beto avatar
Beto 28 Mar.

Very technical comment. Good job.

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20/47
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Many indicators gauge market and investor sentiment; but few are as robust as they possibly could be. Most of the indicators look at the balance of trades on order books, and some look at put-call ratios in the options market; but, most of them gauge a ratio or number without any context as to the actual intention of the trader. The indicator tested for this research has sought to more accurately explain the ratio of buys and sells in the options market of the underlying index. This indicator has proven to show tendencies for price activity of the Euro to go above or below key price levels, depending on up or down consensus measured in the options market.
One major indicator, the traditional put-call ratio, simply sums up and calculates all of the puts and all of the calls as a ratio. This has been criticized for being too crude of a method for gauging market sentiment, since the summation of the open interest is assumed to be long only. Assuming all the options are bought to open—a lot of them could be sold to open—results in a different sentiment entirely. A put-call ratio of 0.75 means the options market is bullish on the underlying stock, but this isn’t necessarily true. If, fo…
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Efegen avatar
Efegen 11 July

It is very complicated and diligent article. I want to know more about how can simply use this to profit more openly. I would love to see your thoughts in your next article. Could please check my article as well, it is about my trading strategy I am working for a long time:)

hrustiashka avatar

Good job!

pshan avatar
pshan 16 July

Thank you!

scramble avatar
scramble 20 July

Interesting topic, I would appreciate bit more explanations just like the reader (me) knows nothing of what you are talking about :)

samymahrous avatar

good job

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1/52
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HOW TO COUNT OPTION LEVELS,
HOW TO APPLY REAL VOLUME TO FX.
Whole presentations is in pictures, to enlarge, please press on any slide!
here's a link to video on youtube:
https://youtu.be/T8MYXB1eCmU

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Marenno avatar
Marenno 5 July

https://www.dukascopy.com/fxcomm/blog/?action=post-show&post_id=102424

Marenno avatar
Marenno 5 July

https://www.dukascopy.com/fxcomm/blog/?action=post-show&post_id=102425

Marenno avatar
Marenno 5 July

https://www.dukascopy.com/fxcomm/blog/?action=post-show&post_id=102426

Marenno avatar
Marenno 5 July

https://www.dukascopy.com/fxcomm/blog/?action=post-show&post_id=102427

Marenno avatar
Marenno 6 July

https://www.dukascopy.com/tv/Live?path=topic/show&id=12640

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11/59
Ranking

  • Almost any trader who starts trading on the new platform, feels uncomfortable or even experiences unbearable distaste for it, cursing it's "stupid" creators. Fortunately, I did not know the whole bouquet of those emotions when a month ago, began trading on the Dukascopy's options platform. Not because it is flawless, but because I have very little experience with similar platforms.


  • In the process of working with the platform, one thing caught my eye immediately, there are other disadvantages implicit. So what do Ducascopy need to become a butterfly among other options platforms...
  • In fact, a little bit. Let's start from the beginning.

  • 1. Pending/Active Opions area.
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maviz avatar
maviz 26 May

Thanks Guys!

al_dcdemo avatar

maviz Great to hear that you're now able to use one-click mode. As for the screen size issue, you may as well report that to support. Or make a request for adaptation of the binary platform for smaller screens, tablets and mobiles.

Cristobal avatar

Good articel !

fxsurprise8 avatar

great post

Sveetlana avatar

Хорошая статья

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13/51
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This is the second installment of my multi-part series, trading for income. In the first part we discussed a popular forex trading strategy, the carry trade. This time around we’ll talk about options, specifically selling options for income.
Options Basics
An option gives the buyer the right but not the obligation to buy or sell a security at a specified price. A CALL option gives the buyer the right to buy a stock at a specified price. A PUT option gives the buyer the right to sell a stock at the option price. A CALL is a bet on rising prices while a PUT is a bet on more losses.
For example, let’s say you buy a CALL option on Apple (APPL) at 130 dollars. The current price of the stock is at $105.97. On the picture below we can see the option chain for AAPL stock with an expiry in June, about 57 days from today. Note that the bid/ask spread for this particular option is 0.08/0.10 (the highlighted part).
Buying this option would cost you only 10 cents. But note the second percentage column, it gives you an approximate probability of your options expiring ‘Out of the Money’. In layman terms, this means that according to the option pricing model, you have a 98.18% of getting 0 at …
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fxsurprise8 avatar

rajib217 zarina Yulia10 Thanks friends!

TaniaS avatar
TaniaS 5 May

Very interesting article

olchikk avatar
olchikk 6 May

отлично написано

fxsurprise8 avatar

TaniaS olchikk gracias chicas

Agnessa26 avatar

Good job)

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7/51
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  • 3 weeks ago I decided to seriously work on binary options. Strictly speaking, this article - the result of this experience. At the beginning I started to learn how to better predict the behavior of prices in the short intervals, such as 1 minute. And what other traders are using to do this.


  • Currently, there are many different automated technical approaches (technical indicators) to obtain the correct forecast for binary options. The most frequently used classical configuration for their application. At the same time the technical indicators are not able to properly respond to the market situation, and as a result, the trader receives an incorrect forecast.


  • Some days I experimented with the settings of the popular technical indicator MACD. This trading approach tested not for a long time and was able to bring 284% of the income for one of the trading week. Now let us consider in detail how to use «MACD» trading techniques.

How to configure technical indicator MACD?
[list][/list]…
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Vain avatar
Vain 29 Apr.

nice article

sharpsense avatar
sharpsense 29 Apr.

Good explanation

rajib217 avatar

really so nice

Faster avatar
Faster 4 May

very good

Uladzimir avatar

позновательно

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11/29
Ranking
From request, today I will look into Barrier and touch options. Touches are probably the most logical of all exotic options, quite simply if you buy a touch option, the market needs to hit the strike of the option to pay out the full amount, conversely if it doesn't reach the strike before the expiration you lose the premium. It is pretty binary in its outcome. Like with all the previous option related articles, I will steer well clear of the maths side of things and won't look at complicated equations and try and explain concepts with words as best I can. Due to the length and detail involved in this I will only look at the importance of touch options - I will however endeavour to continue this on and look at barriers
So a more detailed overview of barrier/touch options. There are 3 common types of touches - One touch, No touch and double-no-touch. They are reasonably self explanatory, but buying a one touch profits if it touches, buying a no touch profits if it doesn't touch a predetermined level, and a double-no-touch pays out if the market stays range bound between two points. Pretty simple I hope, if not, it will become clear when looking at an example.
So what we have here is…
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mimuspolyglottos avatar

Wow. Terra Incognita of FX options starts unleashing. The most interesting high finance article I have ever read here on Dukascopy (+ gamma hedging). I knew about impact on greeks regarding these exos but Your example shows how distorted (logarithmic?) pricing could be. Unexpected to be honest. Some sites and data services declare information about known options on NY cut but there is no clear info about how the main "cooking" goes on. Everything I need is in one blog done by one Pro. Thank You for making me literate Adrian. Regards.

AdrianWS avatar
AdrianWS 27 Feb.

Thanks very much for the very kind words - much appreciated! And yeh, not sure logarithmic pricing is mathematically correct, but the concept of increasing at an increasing rate is the way it works as it gets very close to expiration. The log idea seems like a good way to illustrate that concept though.

And yeah there are websites, such as "Forexlive" which are great, but just say options expiring and nothing more, hopefully I've started to show the real volume that can occur at these times and highlight the importance of them.

Thanks again.

Daytrader21 avatar

Just now seen your article, you have done a good work. A quick remark: I tend to agree that defending or trying to push through the strike and/or price expiration of an option is not per se a manipulation, but it's neither a fair game as in the end the one with deep pockets will win. I'm not an expert in the greeks, actually I only know few thinks about them but I do think that you need a sophisticated math model in order to play successfully the greeks, I really don't know any retail guy to play this stuff successfully. I may be biased but what's your opinion?

AdrianWS avatar
AdrianWS 1 Mar.

Well I agree with the closing point - there are few retailers that consider this level of trading (at least in FX, loads do in Equity), those that do, tend to go and work professionally as opposed to being retail.

There is no doubt that it is not manipulation, glad we agree - but why does fairness even come into it? I mean cliché, but life isn't fair, in no instance is anything ever truly fair. So why should the market be fair?

The main point is that if those without deep pockets can understand these practices so that they can be better placed to trade in all circumstance

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5/46
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Definition:
In finance, a binary option is a type of option where the payoff is either some fixed amount of some asset or nothing at all. The two main types of binary options are the cash-or-nothing binary option and the asset-or-nothing binary option. The cash-or-nothing binary option pays some fixed amount of cash if the option expires in-the-money while the asset-or-nothing pays the value of the underlying security. Thus, the options are binary in nature because there are only two possible outcomes. They are also called all-or-nothing options,digital options (more common in forex/interest rate markets), and fixed return options (FROs) (on the American Stock Exchange). Binary options are usually European-style options.
From Wikipedia, the free encyclopedia

Binary Options or Digital Options,all-or-nothing options or Fixed Return Options(FROs), are a financial instrument, that have been available throughout worldwide markets for many years. Since 2008, that the US introduced binary options trading to the traders’ portfolio of financial tools, what did greatly increase its growth. In practice, Binary Options resemble Sports Betting, but in finance. If the trader use a …
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MAD1172 avatar
MAD1172 10 Dec.

I'm not really into this theme, but it seems a good article, Congratulations and Good Luck. Merry Christmas

ecoplace avatar
ecoplace 12 Dec.

good luck

ppedro avatar
ppedro 12 Dec.

It's a very clear opinion about this subject! Well done and god luck. Happy Holidays... :)

rokasltu avatar
rokasltu 19 Dec.

interesting information but I prefer to be aside this binary options...

Mani avatar
Mani 19 Dec.

i like +1

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2/33
Ranking
Introduction:Volatility can be really simple, yet at the same time can become incredibly complicated. Because of this I will try and keep the more complex ideas as simple as possible so that those new to using volatility can begin to learn. What is key to remember Volatility has no influence on direction, it can be both upwards or downwards. But as you'll find out later it can interpreted to show sentiment.Simply, the volatility of an instrument, whether it an FX pair or the price of gold is its tendency to change in price over time. So in its simplest form you can look at the Average True Range (ATR) of a currency pair to see its recent volatility. Calculated as the (High price - Low price) this can give a broad view of recent moves. One flaw with this is that it cannot be used accurately in a historical context as it shows the "true range" as opposed to the % variation which would be more appropriateAs shown below is a chart of the EURUSD with a 14-rolling day ATR placed in the lower pane, as you can see volatility was clearly high in both the height of the Euro-crisis and during the 08/09 financial crisis.EURUSD daily. JForex______________________________________________________…
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Erialda avatar
Erialda 16 May

Great job

DumbAsArock avatar

A professional presentation. +1

Likerty avatar
Likerty 26 May

Beautiful 3D charts:)

AdrianWS avatar
AdrianWS 28 May

Cheers everyone for the kind words

AdrianWS avatar
AdrianWS 30 May

Just to sum up the month, another great month using volatility in my trading strategies and while I didn't explicitly say how to trade, it doesn't take 2 brain cells to figure out how too though as I mentioned its exogenous from direction but allows you to have greater risk management.

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4/43
Ranking
 INTRODUCTION
 
During the month i shown all steps to build a
trade plan. Starting from a simple indicator, through the study about main
options expiry dates, and till the analyze in COT reports together with a quick
look at possible fundamentals changes.
Here I will show the complete application of
previous 3 articles and what I have already anticipated during the webinar on
25th June 2012.
 
CHARTS
 
Chart 1
 
This is actual (26th June 2012)
XAU/USD hourly chart. I’m using OHLC because candlesticks are confusing my
decisions. As seen I drawn 3 main steps: 
Options.Fundamental bet.Cot reports and Price Action.
 
OPTIONS
 
Last two weeks, options helped a lot my trading
in Gold. When price was around 1620 (Chart 1-1), I noticed these two main
expiry dates coming up:
Chart 2
Courtesy of OptionPopularity.com
Chart 3
Courtesy of OptionPopularity.com
 
Seen in chart
2, there were good amounts loaded with strike price between 1600 and 1580;
the black vertical line is where I found spot price at the beginning of the
week (1620-30).
Seen in chart
3, is the main expiry on 29th June 2012, where we see the strong
bearish loads strike price 1700-1650-1600. Again vertical black line to show
wh…
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positive avatar
positive 4 July

Informative and very neat presentation. Nice to see something unique in your article.

litsat avatar
litsat 4 July

Keep writing :)

AdrianWS avatar
AdrianWS 4 July

Very nice as Usual, keep up the great work.

Edziukas12345 avatar

keep going bro +1

OneGoodTrade avatar

Nice info to read ... I agree.

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23/48
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INTRODUCTION   In my (small) experience I surely understood one thing: patience is your only real friend in trading. No patience? No money. With this article I will show one or two ideas to understand a possible range area in a major currency pair or commodity and so to increase the degree of confidence when deciding a position.   OPTIONS   Option trading is very different from forex trading and I will certainly not try to explain it here now, because to do it properly, would require me to write at least one book, and be completely out of main topic of the contest. As many (should) know, options in markets can be used for hedging purposes and/or as an addiction on a trading plan. In March 2012, you find an article published by AdrianWS1 where are well explained some of these strategies. An option is composed by a strike price and an expiry date. To simplify, here is an extremely quick example: If today I buy a call option in GOLD with a strike @1520,00 and expiry on 16th June 2012, means that if the 16th of June, price will be higher than my strike, I will have a profit; while in case the price will be lower, I will have a loss. Opposite…
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scramble avatar
scramble 12 June

@adrian: yes infact i use this software both to study forex and options. you know ... there is a great correlation between the 2 things! still a beginner with options, for the moment only demo, but improving. thank you for nice words :-)

Maryk1 avatar
Maryk1 18 June

Good work

doctortyby avatar
doctortyby 27 June

I do not particulary like Options but your article gives quality information about them. Good luck this month

scramble avatar
scramble 27 June

@doctor: yes the tool is very helpful in gold and some other instruments. currencies... uhm...

scramble avatar
scramble 27 June

@maryk: thank you!

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4/53
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FX Options Strategy:This strategy Is a Fairly complex Trade style that involves using ~Spot Forex~ trades in conjunction with ~One Touch Options~. Where You are set up in a similar method to that of a Volatility Straddle using Stock options.One Touch Option:  For those of you who don't know What a One Touch option is. It is a form of Binary options which by definition have two potential endings. If the Price you have decided (barrier) is hit then the Counter party will pay out a set amount of money (anywhere from $100 to $100,000). However if the price never rises or falls to reach that point then there will a total loss of the premium paid up which can range from 25-100% of the payout. In other words a $10,000 Payout if EUR/USD rises and reaches 1.34 will cost, depending on the expiration date, between $2,500 and $6,600.Even if you don't use my strategy, I hope you can see the potential for trading with One touch Options as you can easily Double your money with a limited downside risk.I will run through a guide on how to trade this method as clearly as I can With Live quotes as I write.Imagine, you Believe AUD/USD is to rise to 1.0850 in the next month (it doesn't matter if you ar…
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TheTiger avatar
TheTiger 7 Aug.

hi

TheTiger avatar
TheTiger 7 Aug.

Hi Adrian, do u recommend and broker who provide this service? I mean one touch and no touch options

AdrianWS avatar
AdrianWS 7 Aug.

Saxobank.

msimek76 avatar
msimek76 11 Mar.

Hi Adrian. You state that "If it rises to 84.01 then you Profit 10.000 USD from the option and lose 7,613 USD from the trade." I am afraid this is not quite true. You do not profit net 10.000USD from the option because in every case you loose the premium 5.394 USD. The option payoff would only be 4.606 USD which cannot offset the loss from your spot trade (7.613 USD). Any thoughts?

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