Decent Sized Option Strike - What Effect On Market

[hagadol]

My MNI news feed has just reported:

.....a decent sized $1.7650 stirke option is set to run off at the NY cut (1400gmt) and could be providing an attractive influence over the rate...............

FXCM also adds:

A very large 1.7650 plain-vanilla option rolls off
at today"s 14:00GMT NY cut, so some of the touted demand at the strike level may
be option-related.



Can someone explain what this means and likely effect ?!

As I write Cable sits just above that level. Does the level of Cable at the expiry time make any difference ?

 

[TheMoneyMachine]

Hello hagadol,

Basically at the New York cut an Option with a $1.7650 strike price will expire. If the instrument is trading close to this level when expiry is approaching it can cause the price to pivot closely as both parties to try to defend there interests.

Personally i do not take this information into consideration because without further detail it is meaningless and will only hinder your decision process.

Regards

TMM

 

[Rhody Trader]

Hello hagadol,

Basically at the New York cut an Option with a $1.7650 strike price will expire. If the instrument is trading close to this level when expiry is approaching it can cause the price to pivot closely as both parties to try to defend there interests.

Personally i do not take this information into consideration because without further detail it is meaningless and will only hinder your decision process.

Regards

TMM

I concur. If the seller of the option is delta hedging, then the strike price will tend to be an attractor for the spot, but only if the option is very big. Otherwise, the volume of trade just won't matter. Beyond that, it doesn't really matter. These options stories float around the market all the time and they almost never have any real impact for traders like us.

 

[Trader/God]

Nearly zero market impact. IFR feeds dozens of these "news" items a day.

Trader/God