Best Thread Correlation Trading - Basic Ideas and Strategies
be-positive
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morning nvp ------ why the duplication of post/s here and your other thread ----- are T2W paying you ?
NVP
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I wish .....point taken ..........in truth some times I post to wrong thread anyway re speed needed.......
R
rigged
How to use option expiration data.
Hello guys, I'd like to share a very great idea/strategy that is rarely known by individual traders. It's about using option expirations to determine the spot forex price. I wanted to start a new thread for this but for some reason it doesn't let me. (this data is very hard to find on the web, only few sites offer it such as tradingbud.com , you can find the link to the data at end of the post)
So let's get started:
Options are contracts that give the buyer the right to buy or sell an asset at a pre-specified time and price. In return, the seller receives a fee for writing the contract which is termed a premium. A call option is one in which the terms of the contract grant the right to buy the underlying asset, and a put option is one where the right to sell is granted. Since we will only explore the exploitation of options market data for the benefit of the spot trader, there’s no need to examine the details of this trade. Here we invite the trader to regard the currency options market as a closed box, and to concern himself merely with the aspects that we will utilize to predict the movements of spot.
The trading strategies we will discuss are simple and easy to use, and depend on the exploitation of implied volatility for long term trades and expiration data for short term use. To utilize these methods we only need to understand a few simple concepts.
Strike price: This is the price at which the option will grant a payout, in other words, it will register a profit for the option buyer, depending on the kind of option contract.
Expiry date: This is the date at which the contract is settled, and payments are made. This is perhaps the most important data for trading spot forex.
Option size: The payout that the option contract stipulates.
Data on open currency options contracts that are close to expiry is regularly provided by DTCC. You can find this data posted daily in our forum. Open interest on CBOE options is also available from COT reports which the trader can use to form an opinion on trader positioning, and therefore the potential impact of the option on the market.
How to use currency option expiration data to trade the spot market?
One of the easiest and most successful ways of trading the spot currency market is through the use of option expiry data. Options contracts are typically for sums of anywhere between 100 million to 500 million USD, and values beyond the range are not uncommon. Since these are relatively large sums to be concentrated in a few minutes before the expiration, the traders of these options will do all that they can, within reasonable limits, to move the quote to the strike price of the option, provided that the quote is within about 20-30 pips of the strike price at the time of expiry.
Ideal conditions for trading option expiry
The ideal conditions for this method are:
Option expiry is at 10 am EST. (DTCC options expire 10 am EST)
- Option size is greater than 500 million USD.
- The quote is at the strike price before the news release at 8:30 am EST
- The news release is not a major event, such as a Fed decision.
But even without the realization of these conditions sizable profits can be made with this method in a calm and unexcited market. But these overall conditions, along with the significance of the news release, are the main determinants of the market’s mood which will in turn influence our stop-loss and the profit potential.
What happens during an option expiry?
If the price quote is close to the strike price of the option, option traders and other market participants will attempt to steer the quote in direction they desire.
A strong sign that the option traders will defend their position is the early gravitation of the price quote to the strike price. In an example scenario, if there’s a European EUR/USD vanilla put or call option with a strike at 1.1340, and the quote is at 1.1360 at 7:30 am, the quote will be steered to sit on the option strike value at about the news release at 8:30 am. After that, as the price reacts to the news, the quote may move away from the strike price in an unwanted. To successfully profit from this pattern the trader would need to join the option traders as they try to move the quote back to the strike value, and since a lot of people play this game the odds of success are quiet high.
As long as option expiries are proclaimed by news providers, and as long as large expiries tempt option traders to risk relatively small sums to ensure that they receive their payouts, this method will keep paying dividends. An important point that we should keep in mind is the momentum created by option expiries. As option traders buy or sell, their actions will be joined by all sorts of other traders and snowballing effect creates its own power as a mini-bubble is generated. Needless to day, right after the option expiry occurs, the strike price will be just another number on the charts, and will lose all its significant.
You can find option expiration data posted daily [link removed]
Hello guys, I'd like to share a very great idea/strategy that is rarely known by individual traders. It's about using option expirations to determine the spot forex price. I wanted to start a new thread for this but for some reason it doesn't let me. (this data is very hard to find on the web, only few sites offer it such as tradingbud.com , you can find the link to the data at end of the post)
So let's get started:
Options are contracts that give the buyer the right to buy or sell an asset at a pre-specified time and price. In return, the seller receives a fee for writing the contract which is termed a premium. A call option is one in which the terms of the contract grant the right to buy the underlying asset, and a put option is one where the right to sell is granted. Since we will only explore the exploitation of options market data for the benefit of the spot trader, there’s no need to examine the details of this trade. Here we invite the trader to regard the currency options market as a closed box, and to concern himself merely with the aspects that we will utilize to predict the movements of spot.
The trading strategies we will discuss are simple and easy to use, and depend on the exploitation of implied volatility for long term trades and expiration data for short term use. To utilize these methods we only need to understand a few simple concepts.
Strike price: This is the price at which the option will grant a payout, in other words, it will register a profit for the option buyer, depending on the kind of option contract.
Expiry date: This is the date at which the contract is settled, and payments are made. This is perhaps the most important data for trading spot forex.
Option size: The payout that the option contract stipulates.
Data on open currency options contracts that are close to expiry is regularly provided by DTCC. You can find this data posted daily in our forum. Open interest on CBOE options is also available from COT reports which the trader can use to form an opinion on trader positioning, and therefore the potential impact of the option on the market.
How to use currency option expiration data to trade the spot market?
One of the easiest and most successful ways of trading the spot currency market is through the use of option expiry data. Options contracts are typically for sums of anywhere between 100 million to 500 million USD, and values beyond the range are not uncommon. Since these are relatively large sums to be concentrated in a few minutes before the expiration, the traders of these options will do all that they can, within reasonable limits, to move the quote to the strike price of the option, provided that the quote is within about 20-30 pips of the strike price at the time of expiry.
Ideal conditions for trading option expiry
The ideal conditions for this method are:
Option expiry is at 10 am EST. (DTCC options expire 10 am EST)
- Option size is greater than 500 million USD.
- The quote is at the strike price before the news release at 8:30 am EST
- The news release is not a major event, such as a Fed decision.
But even without the realization of these conditions sizable profits can be made with this method in a calm and unexcited market. But these overall conditions, along with the significance of the news release, are the main determinants of the market’s mood which will in turn influence our stop-loss and the profit potential.
What happens during an option expiry?
If the price quote is close to the strike price of the option, option traders and other market participants will attempt to steer the quote in direction they desire.
A strong sign that the option traders will defend their position is the early gravitation of the price quote to the strike price. In an example scenario, if there’s a European EUR/USD vanilla put or call option with a strike at 1.1340, and the quote is at 1.1360 at 7:30 am, the quote will be steered to sit on the option strike value at about the news release at 8:30 am. After that, as the price reacts to the news, the quote may move away from the strike price in an unwanted. To successfully profit from this pattern the trader would need to join the option traders as they try to move the quote back to the strike value, and since a lot of people play this game the odds of success are quiet high.
As long as option expiries are proclaimed by news providers, and as long as large expiries tempt option traders to risk relatively small sums to ensure that they receive their payouts, this method will keep paying dividends. An important point that we should keep in mind is the momentum created by option expiries. As option traders buy or sell, their actions will be joined by all sorts of other traders and snowballing effect creates its own power as a mini-bubble is generated. Needless to day, right after the option expiry occurs, the strike price will be just another number on the charts, and will lose all its significant.
You can find option expiration data posted daily [link removed]
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NVP
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morning all ............see my scalping thread for more updates on below
The Week
usd has had a great week ........gbp and CHF doing fine as well
CAd and AUD the dogs now later week ..Yen been south earlier
Watch the potential reversals on above as traders close out profitable pair trades for the week ......us session is notorious for this move
overnights
CAd and AUD the sells to -30's/40's
all else bull
London 6am
GBP the buy to +30's ...nice pattern
yen and USD selling , Euro selling
pairs scalping...
easy choice today........GU buys all the way so far ....nothing close if you exlude the GJ that I try to avoid lower TF's re spread
cheers
N
The Week
usd has had a great week ........gbp and CHF doing fine as well
CAd and AUD the dogs now later week ..Yen been south earlier
Watch the potential reversals on above as traders close out profitable pair trades for the week ......us session is notorious for this move
overnights
CAd and AUD the sells to -30's/40's
all else bull
London 6am
GBP the buy to +30's ...nice pattern
yen and USD selling , Euro selling
pairs scalping...
easy choice today........GU buys all the way so far ....nothing close if you exlude the GJ that I try to avoid lower TF's re spread
cheers
N
NVP
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From my scalp thread .........
ok my main scalp still running is GU sells ..........i'm in EA buys now ........took some fast scalps on EJ and UJ spike earlier
still taking ucad north
back later guys ..............been a great 2 hours and plenty of pips made
N
ok my main scalp still running is GU sells ..........i'm in EA buys now ........took some fast scalps on EJ and UJ spike earlier
still taking ucad north
back later guys ..............been a great 2 hours and plenty of pips made
N
NVP
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hey all
how did the morning session go ? ........
GU sold off to 3080's before stalling recently ...8287 was the London high..at what point in that 200 pips did you get in and start selling the falls ? ........
usd,yen, CAd, AUD and EUro were bull towards the end of morning .........it was a bit of a battering for sterling !
lets see what the final session of the week brings in US session ......buckle up
N
how did the morning session go ? ........
GU sold off to 3080's before stalling recently ...8287 was the London high..at what point in that 200 pips did you get in and start selling the falls ? ........
usd,yen, CAd, AUD and EUro were bull towards the end of morning .........it was a bit of a battering for sterling !
lets see what the final session of the week brings in US session ......buckle up
N
NVP
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remember for US session .........
look for CAD to go long as traders take more profits on weeks selling
Look for GBP to go Long.......big big selloffs today so I think that wont hold
look for more USD shorts ...its net bull for week
look for Euro shorts again a bull run so far
yen is pretty neutral
naturally this may not happen ...but I am just presenting another pattern/strategy that is based on logic and historical precedence
N
NVP
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hey all ........
been lurking in background more focussed on work but taking a few trades in my break periods
US session has seen a lot of Bull action from a few currencies
the main 2 sells have been Euro and Cad once session settled down from 3pm ish ......
Ucad buys up to 3180's ........but now ranging
Eu sold to 0960's ...........again ranging
Eu sold off to 4700 levels .....not bad at all
have a great evening .........its great down here on the south coast..warm balmy evening around the 25 degrees so will go for a walk down to the seafront ......
N
been lurking in background more focussed on work but taking a few trades in my break periods
US session has seen a lot of Bull action from a few currencies
the main 2 sells have been Euro and Cad once session settled down from 3pm ish ......
Ucad buys up to 3180's ........but now ranging
Eu sold to 0960's ...........again ranging
Eu sold off to 4700 levels .....not bad at all
have a great evening .........its great down here on the south coast..warm balmy evening around the 25 degrees so will go for a walk down to the seafront ......
N
NVP
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heres the week, plus a quick review of the full year
NVP
https://www.youtube.com/watch?v=dFRymc8IqMY&feature=youtu.be
NVP
https://www.youtube.com/watch?v=dFRymc8IqMY&feature=youtu.be
NVP
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nope - sorry - I think there are conversion apps offered if you look around the marketplace or pay a programmer to do it for you
thanks
N
