strangle or stradle on FOREX markets?

Question

is it possible to do strangle or stradle on FORX/currency markets?

thanks

Answer 1

Yes. Strangles cost less, but more risky than straddles.

Answer 2

1

Answer 3

Hi Loveena, If you are still new in the Forex trading world, then it is better for you to get an education first. There is no need to spend your money in trading the Forex market. Why I say "spend" it is because you WILL eventually lost all your hard earned money trading the Forex market. It is just not worth it. But when you do education and finish all the necessary training, it is advisable for you to try what you have learn in demo trading first. If you succeed in demo, then you can try to open a micro account with brokers like FXCM, Oanda or any other broker you might have known later on. Start with micro account, build your account until you can trade standard Lot. It is possible and it will happen if you properly done your way one step at a time. Good Luck....

Answer 4

As far as I can tell (I have Stock Options experience and commodities/index options knowledge) it is not possible to do a straddle or strangle because there are no Forex options - But you could be long one strike and short the other, making more up versus down (or vice versa), or more with/without movement depending on the market and whether there was a gap or overlap in the strikes, depending on which strike you were long, etc. This is more in the nature of creating synthetic longs or similar to combining stocks with options. For more understanding of how a long/short combination Forex position could create another risk profile, consult Mark Rubinstein's "Rubinstein on Derivatives". In that book he shows how to convert two instruments into a Put or Call, etc., where none is available in the market.

But the risk of creating such a combo (as you probably already know) is that, despite the lack of margin calls unlike other other commodities, one side of your position could be liquidated before you want it to be (solution - deposit more margin or buy/sell less contracts per $ deposited in the account).

I suggest you take seriously the Fed's periodic reports if you are doing Dollars; and as well make a risk graph to see what the potential risk vs. reward for the combo you are considering creating. My guidlines are always at least 2 times the gain as the loss otherwise no deal. I don't personally know if the B/A spread will kill many such deals but if B/A works the same as in Stock options it just might.

Answer 5

Neither of the above.

If you can't spell it, you shouldn't be doing it.

-- hh