OPTION VOLATILITIES
The US dollar is stronger today as the market is now anticipating another 25 bps rate hike from the Fed at its June 29th meeting. The week ahead is heavy with data that will be closely watched CPI, PPI, Retail Sales, TIC data, Current Account Balance as well as numerous speeches from Bernanke and other Fed Governors/Presidents.
Vols are lower this week as the market seems to be pretty full up on options positions for the moment. Skews still favor JPY calls and EUR Calls but the smile is not as pronounced as we have seen in past weeks. JPY calls are trading at 0.7/1.0 over JPY puts and EUR calls are 0.1/0.3 over the EUR puts, both in the 1 month.
OPTION TRADE IDEAS
Below please find some strategies, which depending on your view might be applicable. Please bear in mind that all of these trades can be applied to any of the currency pairs, which may be traded. All barrier levels, strikes, triggers, payouts, and maturity dates can be tailored to each individuals views.
View: EUR/USD will break out but I am not sure which direction it will be
Trade: Purchase a 1 week EUR/USD Double One Touch Option
View: USD/JPY will not trade higher over the next week
Trade: Purchase a 1 week USD/JPY No touch Option
VIew: USD/CAD will trade higher this week
Trade: Purchase a 1 week USD/CAD One Touch Option
View: GBP/USD will stay in a range this week
Trade: Purchase a 1 week GBP/USD Double No Touch Option
For further details, please contact the options dealing desk at 1.212.897.7660 or toll free at 1.888.50.FOREX.
