Three Reasons To Consider Currency Options Instead of Forex

Quotable

“It might be tempting for commentators at this stage to digress into describing the torturous history of the disputed Chinese or Japanese sovereignty over these uninhabited rocks, to provide context for how the two great nations of Asia have virtually drawn daggers over barren island territories in a distant corner of the Pacific Ocean. Yet, the deeply unwise and provocative new Chinese decree of unspecified military measures in the event of unauthorised entry into this airspace has served to dramatically broaden the regional context of this bilateral stand-off.”

Kurt Campbell, FT

Commentary & Analysis

Three reasons to consider currency options instead of forex

We recently began a currency options service after a hiatus due to market and other circumstances.  We like currency options for these reasons:

  1. Easy.  If you trade options as we suggest, which isn’t really trading options per se, it is very easy.  We use them only as one way bets, or pure directional bet on a particular currency.  We only recommend buying either a put or a call.  That is it.  No spreads, straddles, butterflies, condors, or other assorted sophisticated fair that comes along with options.  We are not options experts to say the least.  So we keep it simple.  We tell you when to buy [a put or call] and when to sell.
  2. It allows you to buy and hold and know your risk.  If done the way we do it, you know exactly what your maximum risk is—the cost of your options premium (plus commissions).  In spot forex, you must be disciplined and be sure to place a stop because your risk can be very high in that market, as most people trade with higher than normal amounts of leverage.
  3. High profitability because of leverage.  Options by nature are leveraged vehicles.  So, if you get it right you make much more than you would make by simply holding the underlying.  And because there isn’t a great deal of movement in the listed ETF currency products, options allow you to leverage up those returns if right.