A big expiry in EURGBP shows the real effect of options
We’ve just come through the forex options expiry and have just seen a perfect example of how options play out in the spot price.
There was €1.12bn expiring at 0.8940 and we saw the price glued to the level for the last 2 hours. After expiry, it looks like whoever ended up short, closed the position, hence the run up to 0.8947.
It’s not often we see these types of moves with such clarity so it’s good to highlight them when they happen. Unfortunately, these types of moves are not always tradable, unless the subsequent action brings you to a level you already wanted to trade from. What it does do is offer an explanation for certain moves in pairs around this time.
For more information on how the options work, have a read here.