Forex Cryptocurrency General Chit Chat Thread 2019

[MrPippen]

sell options get cash up front.
buy options pay upfront.

Ah I see.

Thank you Mr. Wood!

 

[DukeCS33]

Ah....

So when we buy/sell options, we get the cash premium upfront? Not like forex, the swap is only paid/charged when you close the trade?

Do not get misled by his assertions that up or down he makes money. If you sold a call and sold a put, you would rather that spot does not move too much. If spot moves above your call strike, you lose money on the sold option, if spot moves below the put strike, you lose money again on the sold option. When spot gets volatile, that's where the chance of a big move will happen and that's where one loses money on sold optionality. The exposure is on volatility. Once we have a spike, the sold option may be very out of the money and the cash premium collected upfront may not be enough to pay for those losses. For now, we do not have any big moves so some ignorant one will just gloat thinking that he is making money.... wait for that vol spike then you would see whether he would still love high vols.

 

[MrPippen]

IMF Cuts 2019 Global Growth Forecast To Lowest Since Financial Crisis
From @LiveSquawk

 

[MrPippen]

Power !!!!

100% wins 100% of the time

Waiting for next update! Can't wait! you're my inspiration!

 

[MrPippen]

Do not get misled by his assertions that up or down he makes money. If you sold a call and sold a put, you would rather that spot does not move too much. If spot moves above your call strike, you lose money on the sold option, if spot moves below the put strike, you lose money again on the sold option. When spot gets volatile, that's where the chance of a big move will happen and that's where one loses money on sold optionality. The exposure is on volatility. Once we have a spike, the sold option may be very out of the money and the cash premium collected upfront may not be enough to pay for those losses. For now, we do not have any big moves so some ignorant one will just gloat thinking that he is making money.... wait for that vol spike then you would see whether he would still love high vols.

Then what is the real amount to see? Suppose he close out everything and walk away? Or must wait until the options expire? How to tell is American or European options?

 

[revhappy]

Ah....

So when we buy/sell options, we get the cash premium upfront? Not like forex, the swap is only paid/charged when you close the trade?

Yes, you get cash premium upfront, but that cash is really peanuts in comparison to the exposure. For example, you will be paid like $1k for an exposure of $100k. 1% move in price and you lose the 1k premium. 10% move in price and you are down 10k v/s the 1k cash premium you got.

I am not sure, the premium percentage for FX options, though.

 

[MrPippen]

Yes, you get cash premium upfront, but that cash is really peanuts in comparison to the exposure. For example, you will be paid like $1k for an exposure of $100k. 1% move in price and you lose the 1k premium. 10% move in price and you are down 10k v/s the 1k cash premium you got.

I am not sure, the premium percentage for FX options, though.

Ah ok I see...thanks!

 

[revhappy]

Remember the 3 core concepts I mentioned??..Concept 2...to earn from the market one must stay in the market...if you come out, you become just a spectator. Spectators don't make money !!

Simply put, I stay in the market 100% of the time....my positions are NEVER liquidated....I am always positioned in the market so I never close my options, it goes on forever.

American and European options are modeled differently. American Options are valued using Black-Scholes. European options use Garmen Kohlhagen

American options have free exercise...you can deliver notice at anytime for the life of the option. European options do not have free exercise, it is only exercised at expiration.

Don't be subjective lah. Give an example with numbers. Tell me worst case scenario if the price of the underlying moves 10% against you, what happens.

 

[MrPippen]

Today GBP/USD jin violent! Up down jin fierce!

 

[MrPippen]

Remember the 3 core concepts I mentioned??..Concept 2...to earn from the market one must stay in the market...if you come out, you become just a spectator. Spectators don't make money !!

Simply put, I stay in the market 100% of the time....my positions are NEVER liquidated....I am always positioned in the market so I never close my options, it goes on forever.
.

I see, but for reference's sake, can you teach me how to see the nett nett value? Maybe for instance you want to change to a different broker and closing this broker, so you want to liquidate everything mah.

Such scenarios do happen...right?

American and European options are modeled differently. American Options are valued using Black-Scholes. European options use Garmen Kohlhagen

American options have free exercise...you can deliver notice at anytime for the life of the option. European options do not have free exercise, it is only exercised at expiration.

Thanks..

 

[MrPippen]

Hey guys, any thoughts/outlook for Brexit?

 

[Shiny Things]

American and European options are modeled differently. American Options are valued using Black-Scholes. European options use Garmen Kohlhagen

How are you just so aggressively, assertively wrong every single time you open your mouth? PM me if you'd like, I'd love to understand whether you're just trolling or not.

• Black-Scholes is the pricer for European-exercise equity options.
• Garman-Kohlhagen is the pricer for European-exercise FX options. (Nerd detail: the only difference is that Black-Scholes looks at interest rates in terms of funding cost and stock-borrow cost, but G-K thinks in terms of the interest rates in each of the two currencies.)
• The pricer for American-exercise FX options is... in debate. The industry standard last time I looked a couple of years ago was trinomial-tree; but honestly there's not enough volume in American-exercise FX options for anyone to think too hard about pricing them. I traded like two or three packages of American options in my entire career.

The market standard in this stuff is European exercise.

Don't be subjective lah. Give an example with numbers. Tell me worst case scenario if the price of the underlying moves 10% against you, what happens.

Sure, I'll tell you what happens: he gets abruptly and painfully stopped out because his account's been zeroed.

Let's use a 10% down-move in EURUSD and USDJPY as our example. (His positions in gold and silver are too small to move the needle much.) That takes EURUSD to 1.02, USDJPY to 100, and EURJPY to 102 (from 125!!!).

He's short the following strikes in 150k each (my guess, based on trying to reconstruct Saxo's valuations):

• EURUSD 23Oct 1.16 calls
• EURUSD 23Oct 1.13 puts
• EURJPY 22Oct 126 calls
• EURJPY 22Oct 123.50 puts
• USDJPY 15Nov 112 calls
• USDJPY 17Dec 108 puts

The calls will all go to zero, so he makes about $9000 off those. We can assume the puts are just worth their intrinsic value, that'll be a best-case scenario, in practice they'll be worth a bit more:

• The EURUSD puts will be worth 11 big figures on EUR 150k = 16,500 USD
• The USDJPY puts will be worth 8 big figures on USD 150k = 12mio JPY = 12,000 USD
• The EURJPY puts will be worth 21.5 big figures on EUR 150k =32.25mio JPY = 32,250 USD

So, if EURUSD and USDJPY dropped by 10%, he'd make $9k off his calls and lose a shade over $60k on his puts... total loss, a shade over $50k on a $15k account.

End result, Saxo sends the ah-longs around to pay a visit.

 

[MrPippen]

No..does not happen

You always have the account value to use as a guide to what nett nett to expect if you liquidate everything but that is something you would never want to do...no reason whatsoever....makes no sense.

You're right...one should always stay in the market! There should be no circumstances that prevent that!

 

[MrPippen]

[/list]



Sure, I'll tell you what happens: he gets abruptly and painfully stopped out because his account's been zeroed.

Let's use a 10% down-move in EURUSD and USDJPY as our example. (His positions in gold and silver are too small to move the needle much.) That takes EURUSD to 1.02, USDJPY to 100, and EURJPY to 102 (from 125!!!).
.

Hey, but just for discussion sake, it seems he is able to "clear" his options quite readily and I don't think a 10% move in a day for EUR/USD or other more liquid pairs are likely. Even during the yen flash crash in January, I think it was less than 5%?

To be fair, I think many people would be margin-called if any of the pairs they are holding were to move in a reverse direction by 10%..

 

[blurinvestor]

add - WYNN Apr19 141 PUT @ $1.90
That should cover any losses off the 135 PUTS

added - NTES Apr19 267.5 PUT @ $3.00,
now average at $4.55 ( 5 April)

NTES Apr19 267.5 PUT @ $6.10
$271 is some minor support, so it needs
to drop below that to continue a downward move

on paper look green BUT if I closed I die. Hope this make sense

Closed -
WYNN Apr19 135 PUT @ $1.75 down from $2.10

WYNN Apr19 141 PUT @ $4.25 up from $1.90

make up for losses on the 135 PUT and book some profit

No, you don't stay in the MARKET too long - be like the water just follow the flow and dance with the price. TIME your step in and TIME your step out. If it is all the TIME, well a broken watch get it right twice a day.


GOLD volatility on the way

 

[Shiny Things]

Hey, but just for discussion sake, it seems he is able to "clear" his options quite readily and I don't think a 10% move in a day for EUR/USD or other more liquid pairs are likely. Even during the yen flash crash in January, I think it was less than 5%?

To be fair, I think many people would be margin-called if any of the pairs they are holding were to move in a reverse direction by 10%..

Oh yeah, I was using Revhappy's specific 10% example to figure the PnL. That said, couple of things:

1) You definitely can't always assume that FX options markets are liquid. Been there, done that. When the markets are liquid, they're extremely liquid, and you can move $100mio notional without even moving the price; but if markets are skittish, and it's late in the day (after NY goes home), markets can get very illiquid, spreads get wide (like three or four times as wide as in regular hours), and it can be expensive to close out a position.

2) Also, it'd take a lot less than 10% to zero his account. Just eyeballing it, I reckon a 4% gap lower in EURUSD and USDJPY would be enough to zero his account. Even a 1-2% gap lower would set off Saxo's account value protection and forcibly close out all his positions.

 

[DukeCS33]

Don't be subjective lah. Give an example with numbers. Tell me worst case scenario if the price of the underlying moves 10% against you, what happens.

Rev, some wannabes just do not know enough but are too arrogant to admit it. So they either dismiss it rudely, pointing to your lack (rather than theirs) or throw a smoke bomb to confuse you. It has already been an established modus operandi and he just cannot counter facts or points put forth point blank or confuse you with some grand theory about pricing when he gets the basics all wrong. See how many times his misleading assertions have been called out and he could not counter them at all or dismissed them by calling others names.
And we had this discussion before, a systematic method of selling options regardless of vol levels, would just end up in tears so its only a matter of time before his account blows up. He is a newbie and thinks that the saxo account value shield would protect him - guess it is just telling that he has never been a real life professional and does not know how the markets work. Take the CHF flash crash of 2015 as an example - would the account shield work in those scenarios? We had just too many of such flash crashes to know that it is real and not an outlier event. Vols do not trade linearly - when there is a spike, it can be brutal.

 

[DukeCS33]

Top pic is the state of my account when I started 4 months ago

Bottom pic is state of my account right now..... do a calculation and you will see my account increased in value by 213% in 4 months.

Shiny, He has posted some strikes before.He is deliberately not showing the strike info less it gets embarrassing when they expire and Saxo exercises it against him. Looking at the EUR option trades, I am guessing that the options were sold initially with a common tenor. Subsequent rolls were not done with the same tenors with those out of the money, requiring a roll out to a much later date so as to secure a premium that would cover losses. Looks like losses are being covered up by new liabilities and those are can kicked down the road. The bomb is just waiting to explode.

 

[atf0007]

100% win? hahaha kena exposed liaoz - just roll over losses and defer till later - such a lousy move and slap it with fancy concept such as trading based on time. like that also can - wait hah - i call my feng shui master, he got sure win strategy to align all the heavenly stars... wahahaha

It is indeed greater fun watching haolian people who kena exposed for being fake still trying so hard to save face and carry on the pretense...OMG....hahahahahahahahah

 

[atf0007]

someone angry liaoz...kena exposed for being fake and mouth kena shut, dun know how to reply other's rebuttals - can only start calling others names or do character assassination. wahahaha……. It is indeed greater fun watching haolian people who kena exposed for being fake still trying so hard to save face and carry on the pretense...OMG....hahahahahahahahah