Does O/N FX Option market exists ?

Najiboo · March 3rd, 2008, 2:37 pm

Does O/N FX Option market really exists ? If Yes --> Q1: is there any quotation page for the O/N vols?Q2:Who Buy/Sell one day expiry FX Options in the market ? Hedgers ? speculators ? FXO traders ?Thank you,N

MCarreira · March 3rd, 2008, 7:28 pm

There are prices on brokers (interbank market) for O/N FX Options in USDBRL at least, and customers ask for prices on it as well.You could be exiting an existing position (or reducing pin risk), or just speculating.

fars1d3s · March 3rd, 2008, 11:35 pm

GLOBEX at the CME posts quotes for options on futures O/N, but only for major G7 currencies. My bid/ask trades have been hit while I am sleeping.

Najiboo · March 4th, 2008, 8:06 am

Thank you guys for valuabme answers !D you use succh O/ N expiry to construct your FX Vol surface! for G7 currencies for example ?

BornToBeTrader · March 5th, 2008, 10:53 pm

I thought O/N options are mainly used if FX traders want to carry over their forward or futures positions

Najiboo · March 6th, 2008, 8:08 am

Hi,Since you are not 100% sure that your option will end up ITM !I wondering how one you can use O/N options to finance his forward or futures positions!

fars1d3s · March 9th, 2008, 11:44 pm

There are banks and brokers offering FX options trading 24hrs a day. These 2 brokers let you trade FX spot and options electronically O/N:Saxo BankRCGIf you trade in large sizes (1,000,000 USD or more), then UBS will offer you the same services as those 2.

Najiboo · March 11th, 2008, 8:30 am

Thank you for the information !

bskilton81 · March 12th, 2008, 12:37 pm

In OTC space, yes, but bid-ask tends to be wide. Also, though they will quote you a vol, they don't really trade like longer options, because of the difficulty of hedging.