The forex options expiring at the 10am (15.00 GMT) New York cut 15 February 2018

Once again, it’s standing out that the downside vanilla option coverage is pretty non-existent. There is nothing under 106.00 (55m). It seems traders still don’t fully believe that the pair can fall further. However, today there’s been chatter that recently bought 108 & 107 puts have been spread against (selling) 105 & 104 puts, and that many of these are with short expiries (1 week-1 month). That’s an indication that traders were wary of the fall through 107/108 but that they don’t expect it to go lower that 104/105. There’s also talk that there are binary options in place at 104 & 105.

There can be differenty types of binary options (Normal binary, Binary barriers, Double barrier binaries) and it’s not clear what ones these are exactly. For simplicity (as they all roughly work in the same way), if we just assume they are normal binaries, then they pay out if the the price is above/below the strike at expiry. However, what’s different between these and normal vanilla options is that the payout on a binary is a set amount no matter where the underlying spot price is at expiry (if in the money). I’ll bring you more info as and when I get it but for now, assume these binaries need the price to stay above, and thus we may see some defence if we move down there.

For more information on options and their effect on spot prices, read our guide: An explanation of Forex options and their impact on currency markets.

Forex option expiries

Forex option expiries

Ryan Littlestone

Psychedelic chartist extraordinaire. Have your shades ready.
Philosophy: “Don’t be a Dick for a tick”

Read how Ryan got into trading here
Ryan Littlestone

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