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Options on the 6E
Started:October 5th, 2016 (03:36 PM) by StreetPreacher Views / Replies:78 / 2
Last Reply:October 8th, 2016 (12:11 PM) Attachments:0

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Options on the 6E

Old October 5th, 2016, 03:36 PM   #1 (permalink)
Elite Member
Chattanooga, TN/ USA
Futures Experience: Beginner
Platform: Ninjatrader
Favorite Futures: 6E
Posts: 5 since Jun 2016
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Options on the 6E

I've never bought options on currency futures before but would like to start. I took a course on Institutional trading where the instructor said the banks will for example Buy the 6E and Buy a Put option at the same time to hedge themselves. Sometimes the Put is bought ATM and sometimes its OTM. They like to do this when they think Volatility is about to increase. My question is how expensive can these OTM Puts be? For example, if you buy a Put that's 50 ticks OTM will it be too expensive? In other words, can you justify the cost of it with your trade? I looked on an option website, cant remember which one, and it showed very expensive Call and Put options. Breakeven was something like 150 ticks away from the Strike.

Has anyone tried this before? He said this was a poor man's way to Gamma Scalp.

Appreciate the help.

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Old October 5th, 2016, 03:36 PM   #2 (permalink)
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Old October 8th, 2016, 12:11 PM   #3 (permalink)
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New York, NY
Futures Experience: Advanced
Platform: OptionVue
Broker/Data: IB
Favorite Futures: RUT, SPX options
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Buying the underlying and a put is buying a synthetic call. If the put is OTM then the synthetic call will be ITM. Why would you want to pay double commissions and slippage for the same risk profile when you can just buy the call?

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