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Optos Share Discussion Threads
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|No, straight written forex option for the amount of the money market deposit. Same idea as a covered call on an equity holding except if called you would receive cash at the strike price in the currency of the option (eg. GBP/CHF).
edit. the aim was solely to boost yield so the strike were set on that basis. From memory they were never called.|
|Ok, next "covered Calls on Money Market deposits" are these options on Pheonix? If so what is their code or name to look them up?|
|"put out these deposits for ever".
Meaning locking in the high rates that were on offer I would never have had to touch the capital. ;)|
|Thanks Alphorn, blog invite noted, thank you.
CV to experience to trading domain all assiting your trades fascinating.
"Please say if it all sounds nonsense." not nonsense but I do wonder what instruments you were using. i.e. You say "put our these deposits for ever" are you talking about PUT options on cash? If so are these on the Pheonix system?
I've used Eurodollar's (well CFD's on them)to capture interest rate trends in the US but wasn't aware of what I could do in the UK for the same purpose.|
|My brother is an economics professor and he would not be a supporter!|
|My thread is trying, as a 'blog', to assemble macro data.
My thought is that GBP will overshoot to the downside and therefore I would open bullish GBP forex positions.
....please come and join the discussion!
Please say if it all sounds nonsense.|
|All sounds successful which it has been.
Here is a major miss!
I missed out completely on the rapid fall in interest rates!!!
I was very heavily in cash and could have put out these deposits 'for ever'.
Completely missed it. :((|
|Praipus - some notes on my forex trades. Not scientific so don't be disappointed.
- focus on a particular pair
- read every macro event relative to that pair over a very long time (years)
- define a range from all the data that you have assembled
- watch to ensure that some event will not define a new range
- trigger forex actions when the cross rate approaches range limits
I am not a forex trader. The approach was defined when treasurer of a large NASDAQ company as taking advantage of foreign exchange trends.
I may do nothing for a long time. Positions are normally 3 - 6mths out.
Notable examples of activity:
- 1980's as Treasurer - very large gains!
- 1987 Thatcher years - personal. Good gains and contrarian to market
- 2000's - personal, covered calls on money market deposits. I wish that I had had the idea earlier, yields amazing
- 2000's tried out some cross over idea using money market deposits. Too complicated and stopped. Smallish gains
- 2016 - a strong view that GBP overvalued - all risks IMO to the downside so mega bearish GBP. Positions still open today. Large gains|
Trying to keep track of the likely impact from the referendum here - please look in.
Quite a bit of forex views.|
|Praipus - I shall reply in the morning.|
|Harv - Our broker in London didn't know about these things.
I asked in Geneva what is the difference with straight forex options.
"Basically the result is the same between the two. However, with a DCI you are placing the cash on a deposit for the said period, the premium is received at the end, while with the option, you don’t need to have the cash available and you receive the premium straight away.
Now it all depends on the amounts, I was not sure for how much you wanted to trade. If it’s above EUR 100k, then you should go for forex options, the premiums are usually better, for smaller amounts a DCI would be better".|
Alphorn I'm more interested in your FX option trades. Either prior, during or post execution. Risk limitation if long options or short options with cover is of interest.
Things like how far out of the money duration, are you looking at interest rate, time, volatility etc.
Currently my "what if" analysis are nullifying my reasons for trading. I like your previous mention of your gut feel on the Euro it was opposed to mine but sounds like it's going well. When you've closed out the trade please feel free to boast here of your success.|
|I was not aware of this options thread but have now put it on my favourite list.|
|I have asked the difference between opening a covered forex option and the above.|
|Here is a worked example from today (Geneva private bank). What do you think?
"DCI’s are similar to Forex options except that they are done in the form of currency deposits
Please see EUR/GBP chart attached. Current rate is ~0.8718
As with options the time period and strike rate can be adjusted, DCI’s are easier to trade for smaller amounts
I have enclosed one example that might be interesting:
In this example (see enclosed indicative termsheet)
Client places EUR 100’000 with possible conversion into GBP
2 months (expiry 11th May 2017 at 10 a.m. NY time)
Rate 4.00% (annualized)
IF EUR/GBP is below 0.8811 client receives back EUR 100’000 + 677.78 interests
IF EUR/GBP is above 0.8811 the whole amount of EUR 100’677.78 is converted into GBP at strike rate of 0.8811 and client receives GBP 88’707.19"
Obviously you might turn the direction put/call etc. but this is how it works.|
|Summary from google:
A Dual Currency Deposit (“DCD”) is a foreign exchange linked deposit in which the principal can be repaid after being converted into the alternative currency at the strike rate at maturity depending on the spot foreign exchange rate.
What I don't know is whether better than forex options???
This time I am getting ready to close some forex positions. Forex has done very well for me!|
|No sorry Alphorn DCD's are new to me. Sound a bit like futures and I've only traded those with CFD's and SpreadBets.
Where do you trade DCD's who offers them?|
|Praipus - do you know anything about DCD's? Dual currency deposits.
You deposit funds in say €uros take a strike price say against sterling for which you receive a premium. If the rate hits the strike your deposit switches to the other currency. Could be interesting - advantages over a straight forex option??|
|Today: added to my BT position.
STO dec 300P @ 20
Tried to get better premium but was not possible in this market with bt in strong demand.|
|Bought the Weekend FT in a fit of nostalgia enjoyed it but where is the FTSE Futures Options and Equity Option list now? Has everything gone to America?|
|Today: sold BT.a Dec 300 firstname.lastname@example.org|
|ALP: I am using data.theice.com/MyAccount/Login.aspx from my bookmarks|
|Pleasure, no UU.|
|Sainsbury under J :)