EURUSD 1.2300 strike expiry today rumored for good size ........says the news headline, but how do you interpret this ? To
understand fx options it is best to explain some of the conventions that all
professional option traders know but is not necessarily, written down anywhere. The aim of this article is to level the playing field somewhat for the retail trader by discussing common procedures in the interbank fx options market.
Majority of the fx option flow is OTC (Over-the-counter),
which basically means that it is independent of any exchanges. While terms can
be individual, in order to maintain liquidity there are a number of
standardized conventions. Still, these conventions vary from currency pair to
If you know a little about fx options, you have probably
heard about NY cut-off which is 10AM New-York time. This is when almost all fx options are expired, especially for
majors, but there are a few exceptions.
If you trade emerging market currencies you should know that
for TRY, the cut-off is 12:00 London time, while for PLN it is 11:00 Warsaw
time (normally 10 LDN), while for HUF it is 12:00 Budapest time (normally 11
LDN). If you trade asian emer…