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Dan Larsen
Saxo Bank’s Head of FX Options Dan Juhl-Larsen shares his insights and experience trading FX options and looks at the opportunities on offer in the market.
Squawk / 25 August 2016 at 12:27 GMT
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United Kingdom
OK, So I succumbed to putting on one more trade for the day. We were long 6800PUT (corresponding short at 6700) and wanted do something about the risk of market going up. Ideally we don't want our spreads to be longer than one strike, so we decided to purchase 6750Put.

Now the interesting bit - instead of selling the 6800PUT at the market, we decided to use that for a marry trade. We bought a CFD at 6817 and then sold a call at 6800. Only problem is SAXO does not recognise this as a married trade and have upped the utilised margin to 50%.

If we go down from here, CFD starts loosing big time, but you are covered with a PUT at 6800 and also the sold CALL will start winning.

Future trade will now be performed at either 6750 or 6850, whichever level comes first.

At 6850, we will roll the 6900 CALL above and check to see delta on 6700 PUT.

At 6750, we will roll the 6700 PUT below and check to see delta on 6900 CALL.

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