0 Forex Options Trading - How Forex Options Are Calculated

By Timothy Stevens

Forex options are calculated with 'Greeks'. A basic explanation of these 'Greeks' will help you understand how and why the forex options move and behave in a certain way. An option is a derivative and how it's value is derived is from a formula that combines these Greeks together. The Greeks are how these options respond to various factors such as price movement, time decay, volatility, and interest rates.

There are 5 Greeks involved and we share go through them one by one.

Delta:
The speed of the option's price gain or loss against the gain or loss of the 'mother' or underlying asset price is known as the Delta. The Delta is a figure that shows us how fast or slow the option will move relative to its 'mother' or underlying asset. A Delta of 1 means the option price is moving at the same speed and direction as the 'mother' or underlying asset. A Delta of -1 means the option price is moving in the opposite direction for every point the 'mother' or underlying asset moves.

The probability of an option expiring in-the-money is also expressed in the Delta. An at the money call option has a Delta of 0.5; i.e., 50%, meaning a 50% chance of expiring in the money. A deep in the money call will have a Delta of near 1, or 100%, meaning a near 100% chance of expiration in the money. A very out-of-the-money call option will have a Delta of close to zero, meaning a near zero chance of expiring in the money.

To be continuing at... Forex Options Trading - How Forex Options are calculated (Part 2)

Author note:
I will like to offer you a Free "Getting Started Trading FOREX with Options" course when you subscribe to my newsletter on Non Direction Trading. You will get your instant access at http://www.NonDirectionTrading.com


artical source by:-http://www.NonDirectionTrading.com

0 Forex Options Trading - How to Use an Alternative Trading Method

By Timothy Stevens

When it comes to the Foreign Exchange market, a lot of people are asking how to be able to profit out of it. There are millions of traders worldwide, but only a handful of them are able to make some money; and even fewer people are able to make the big bucks. The majority of traders are left with nothing but empty pockets and wasted time. This is mostly because trading in the Forex market proves to be difficult, there are a lot of things to learn and doing it right may not even be enough; luck is also a huge factor.

Now, there is an alternative way to make money in the Foreign Exchange market; this can be done by purchasing Forex options. These options give the buyer an exceptional advantage. Purchasing an option for a set amount of currency which gives you control over them is cheaper than purchasing them immediately. In other words, you reserve the right of ownership until the due date expires.

Also, when you do execute your right to the contract, you would only pay the price determined at the beginning of the contract. Which means you can purchase an option for a certain currency which you think would rise in value. If it does, you execute the option and purchase the currencies cheaper, thus makes you profit. The use of Forex options would mean lesser risks as you do not pay full amount of the currency yet you will get almost total control of what can happen to it over the next few months.

Author note:
I will like to offer you a Free "Getting Started Trading FOREX with Options" course when you subscribe to my newsletter on Non Direction Trading. You will get your instant access at http://www.NonDirectionTrading.com


artical source by :-http://www.NonDirectionTrading.com