Hello fellow traders,
I've been trading spot FX for more than 10 years (3 years full time) and have a good understanding of it.
Recently I was introduced to new a FX option trading strategy that looks very, very interesting.
But since I have very little knowledge about FX options I just would like to reach out for some help to any FX option traders out there?!
My first question is about forward points.
As I understand all the FX options premiums are based on future price?
For my new strategy, I still trade spot FX (not FX options, I just use FX options for data calculation and finding the edge)
So since I enter trades on spot FX, do I need to add/subtract Forward point from the FX option strikes?
And if yes, does the forward point calculation would be different if I go LONG vs if I go SHORT?
For example. In spot FX if I Buy AUD/USD I get paid swap (the difference between two currency interest rates) so forward point for AUD/USD is negative value (since at spot FX you get paid from day one)
Now, if I go short AUD/USD in spot FX I have to pay swap every day, does this mean the forward point for AUD/USD, in this case, is a positive value?
Hope it makes sense,
Any help would be much appreciated,
Cheers,
Ivolux
I've been trading spot FX for more than 10 years (3 years full time) and have a good understanding of it.
Recently I was introduced to new a FX option trading strategy that looks very, very interesting.
But since I have very little knowledge about FX options I just would like to reach out for some help to any FX option traders out there?!
My first question is about forward points.
As I understand all the FX options premiums are based on future price?
For my new strategy, I still trade spot FX (not FX options, I just use FX options for data calculation and finding the edge)
So since I enter trades on spot FX, do I need to add/subtract Forward point from the FX option strikes?
And if yes, does the forward point calculation would be different if I go LONG vs if I go SHORT?
For example. In spot FX if I Buy AUD/USD I get paid swap (the difference between two currency interest rates) so forward point for AUD/USD is negative value (since at spot FX you get paid from day one)
Now, if I go short AUD/USD in spot FX I have to pay swap every day, does this mean the forward point for AUD/USD, in this case, is a positive value?
Hope it makes sense,
Any help would be much appreciated,
Cheers,
Ivolux
