FX Vanilla Options, the Solution to Criminal Brokers

vanillaman

Member
67 6
I am starting this thread in response to the suggestion made on this thread. It appears there is a need.

I was a professional Vanilla Options trader for a number of years. I worked with both Nomura and MS as an FX Options trader. I have done incredibly well from it and for the past 2 years since leaving banking I have been trading Vanilla Options retail, it was very difficult to find in retail understandably most brokers can only handle binary Options as it is a scam. So long and short I eventually found the only broker in the UK with this and 2 years on I pretty happy, a little bit more expensive than interbank Options but the gains show make up for it and it is natural with the risk on Options that the dealer gets compensated fairly.

Anyway, retail brokers have had open season on poor clients who have stops hunted within some 100 pips these days, the average volatility on assets has been cranked up. Most professionals don't trade spot, they trade derivatives, this is a crucial part of trading that leads to guys make lots of money. It is nearly impossible to make money in spot markets, most people are just lying and brokers are doing a fine job of circulating fake statistics. It's all "Fugazi". Real money is made everyday in the futures and Options markets by professionals, they don't want you to know because that will put many brokers out of business as most can't even afford a seat on a real exchange and refuse to offer OTC products that mean that they won't make as much money. Notice TBond futures are rarely available as CFD's. That's because TBond futures are easy to call and a really directional. I am an Options trader, one of my good friends was a Barclays Bond trader and he was making $1,000 a day with roughly $250-$300 risk, he is has made millions on T bond futures.

I can only tell you about Vanilla Options

An Option is a derivative most traders will trade the Option and create a delta hedge in the cash market as necessary. Hence the NY cut is more and more talked about.

Options don't need stop losses as your risk is the premium, that puts an end to be stop hunted. Volatility is your friend, the more volatile the market, the better for you.

Options expire, so you can long date them for time value or short date and look for intrinsic value.

It can also act as insurance and limit losses in the cash market but with various strategies in the Options market like Straddles and Strangles, there is not much point.

Options have there cost built in so naturally the spread is wider, that said once the premium is paid the spread is one off cost, so the broker cannot spread widen something that is the norm in the spot market, imagine no slippage.

These are few reasons why professionals including your broker is active in the Options market making money off you. Time to spark a real debate here. Open your eyes to this. It may be your only saviour.

comments welcome from FX Options traders. The above link takes you as well to this Options school for free, so you can gain some background, it is one of the best sources I found in one place.

I hoping to generate some healthy debate and share experience on this thread on how everyone can start reaping the rewards of trading. No more dreams...
 
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options-george

Well-known member
483 93
Thanks for sharing your views - much appreciated. (y)

I agree with you 100% that binary options are effectively a scam - it's a decent way for brokers to rip faces off of retail traders, given the huge implied edges from the bid-ask and the broker's ability to manipulate prices.

[I have not traded fx options but have traded options on STIRs and equities in the past, on both retail and on market-maker's side]
 

vanillaman

Member
67 6
Totally subscribed! I want to see a "pro" beating the markets!
Keen, thanks for subscribing but it is not about beating the market it is about being free from manipulation that is obvious in the spot markets. Dealer plug ins used by so many brokers will ensure you are always losing money.

It surely is no special pill that pros take to make money, in fact most of these guys can barely add 2 + 2, yet they make thousands a week. Simply ask them what they are trading... They will say futures or Options. It's a no brainer... Yet so many keep signing up to spot FX. I didn't the beat the markets, I just know what you are up against, once upon a time I guy like me was screwing you from a trading desk.
 

tomorton

Legendary member
8,435 1,365
I hear plenty about the success possible for the private trader through options - but usually its trainers or brokers doing the talking, not traders.

We need to hear more about options trading from options traders.
 

Signalcalc

Veteren member
4,670 1,030
I don't mind admitting that I find options difficult to understand, even the link to the options school doesn't make it much clearer.

Here's my numpties questions on it, please correct me if I'm wrong on the following:

  1. What is the difference between a Vanilla Option and any other type of option?
  2. A call is a long, a put is a short ?
  3. Can you buy and sell a call and a put or is it just buying a call and selling a put?
  4. The option part givies you the option to buy or sell at a better price any time before expiry?
  5. The strike price is the price you estimate it will reach within the expiry time of the option, if it get's there the trade is closed automatically and you win?
  6. If it goes in your favour but does not reach strike price at expiry then you take a smaller than expected profit?
  7. You can close the trade earlier for a smaller profit.
  8. If price moves against you then there is nothing to do until expiry as the premium is just lost if it is below your entry price?
  9. Can you choose your own expiry times and prices or are these fixed by the broker?
  10. Can a losing option be closed for a smaller loss?

Examples:
  1. On a call you are expecting the market to rise above your entry price and you provide a strike price, say on a weekly expiry, the price hits your strike price before expiry, you win the full amount.
  2. On a call you are expecting the market to rise above your entry price and you provide a strike price, say on a weekly expiry, your analysis tells you the market will not reach strike so you close out for a smaller profit.
  3. On a call you are expecting the market to rise above your entry price and you provide a strike price, say on a weekly expiry, price initially rises but then falls anywhere below your entry price, the option expires and you lose the premium.

Thanks for your help :clap:
 

vanillaman

Member
67 6
I hear plenty about the success possible for the private trader through options - but usually its trainers or brokers doing the talking, not traders.

We need to hear more about options trading from options traders.
That's pretty normal I guess but an Option is a derivative, it kind of speaks for itself. We all saw the big short. The idea with an Option is both parties have reasonable risk. In the spot market the risk is one sided all the time. So no one can make you succeed in anything but it sure is possible. One thing that is clear you will forever lose money in spot FX. That's a fact.
 

vanillaman

Member
67 6
I don't mind admitting that I find options difficult to understand, even the link to the options school doesn't make it much clearer.

Here's my numpties questions on it, please correct me if I'm wrong on the following:

  1. What is the difference between a Vanilla Option and any other type of option?

    The comaprison is the more popular binaries. All other Options are the same. Binary creates parameters and agrees fixed payouts on achieving those parameters. Well, there is the difference. Binary is a scam. The scenarios are almost always unreasonable to bet on.
  2. A call is a long, a put is a short ?

    Yes and No. A Put is a contract on the short side, a call a contract on the long. You can buy and sell these contracts. If you opt to sell a call or put you assuming all the risk similar to an FX broker who market makes. So if you sell/write an Option your downside is unlimited, in retail FX Options, the broker will clear beyond a certain loss, it is riskier to write Options, you get the premium upfront so it is attractive.
  3. Can you buy and sell a call and a put or is it just buying a call and selling a put?

    The answer is in the previous
  4. The option part givies you the option to buy or sell at a better price any time before expiry?

    The right but not the obligation, so correct. If the Option expires in the money you will be cleared and the value of your premium paid.

  5. The strike price is the price you estimate it will reach within the expiry time of the option, if it get's there the trade is closed automatically and you win?

    No wrong. Strike is the price at which you can exercise the Option. You don't have to set a strike, you can do an at the money trade. The Option is in play till you exercise it, its value is determined by the "greeks" a must understand. The idea is to exercise in the money.
  6. If it goes in your favour but does not reach strike price at expiry then you take a smaller than expected profit?

    Well, that would signify an out of the money trade, so the premium will be lower, so yes you will have a premium worth less and your inability to exercise the option would mean you will lose your premium at expiry.
  7. You can close the trade earlier for a smaller profit.

    Yes if the Option style is American, European Options can only be exercised at expiry. That sucks only in institutions do we play with these.
  8. If price moves against you then there is nothing to do until expiry as the premium is just lost if it is below your entry price?

    Yes, that's the point. So if it moves against, depending on your time value, you may still make it out at strike and lose nothing. Volatility these days is so high that you have a good chance of making it out if you did an at the money trade, those have deltas of 0.5 there about.
  9. Can you choose your own expiry times and prices or are these fixed by the broker?

    Of course you fix your own expiry time. If you need 1 year long dated Options, then you may need to do LEAPS, different product but other that the broker doesn't care hence they charge you upfront. Binary is the only thing that deals fixed.
  10. Can a losing option be closed for a smaller loss?

    The premium is always the risk but on an American Option it is possible to take a smaller loss because vega could impact the premium positively even in an Option losing intrinsic value.

Examples:
  1. On a call you are expecting the market to rise above your entry price and you provide a strike price, say on a weekly expiry, the price hits your strike price before expiry, you win the full amount.


    Well an OTM option would see strike breaking you even, however at strike vega and gamma are highest for ATM option so you could see your premium gain value really fast, again the value of the option cannot be pre-determined, so as the option nears expiry delta of an in the money call option is 1 the equivalent for example of the 100k base position spot. So you will get to keep what ever the option is worth when you exercise regardless it pre-expiration. I have done trades that tripled in just a few days despite having 21 day expiries. Usually the best time to exit unless you expect volatility to increase. Options lose value daily something to bare in mind, I rarely hold to expiry.
  2. On a call you are expecting the market to rise above your entry price and you provide a strike price, say on a weekly expiry, your analysis tells you the market will not reach strike so you close out for a smaller profit.
  3. On a call you are expecting the market to rise above your entry price and you provide a strike price, say on a weekly expiry, price initially rises but then falls anywhere below your entry price, the option expires and you lose the premium.

Thanks for your help :clap:

I think you get the idea... Can't believe I just spent a few minutes writing this :)
 

vanillaman

Member
67 6
This seems to be an 'educational' site, which I don't need - where is info on the retail broker you have found?
The link to the broker is on the site, even their name. I don't intent to paste broker links on here. I prefer to just share the education stuff that is free to help others, if you want it that bad there is always google. Good luck buddy, you seem to know what you are doing. Besides if you don't learn about Options you can't trade them. So a better place to start is education, unless you are planning to start losing money.
 

mb325

Well-known member
473 87
The link to the broker is on the site, even their name. I don't intent to paste broker links on here. I prefer to just share the education stuff that is free to help others, if you want it that bad there is always google. Good luck buddy, you seem to know what you are doing. Besides if you don't learn about Options you can't trade them. So a better place to start is education, unless you are planning to start losing money.

Ok. I must be a moron because I can't find a link anywhere - in fact there is a page called 'how to compare brokers' which doesn't have a suggestion for retail fx options, which I'd assume would be a good place to put it.

I'm sure you're allowed to PM me a link to the broker, if you wouldn't mind?
 
 
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