Diversify your investments with FX Options trading
FX Vanilla Options trading with FAB Investing is a golden opportunity for investors to diversify their trading strategies by using various investment timelines as well as hedging spot positions. You enjoy access to more than Spot FX crosses and can trade on changes in market direction as well as markets without clear direction.
- Trade over-the-counter (OTC) on 43 FX Options including Gold and Silver
- Enjoy low margin requirements with professional netting calculations for hedging spot positions.
- View your net positions and get live prices on Maturities, Deltas and Strikes directly on your trading platform via our cutting-edge FX Options Board.
- Utilise flexible Currency Option expirations, from 1 day to 1 year.
Trade FX Options on live prices with available liquidity of a Market Maker.
FX Vanilla Options
A Vanilla Option is a derivative financial instrument that gives the buyer the right, but not the obligation, to either buy or sell Call or Put Options of a predefined notional amount of a currency cross at a pre-defined price ("Strike price") at a predefined date in the future (“Expiry date”). The seller of the option has a corresponding obligation to fulfill the transaction should the buyer decide to “exercise” his right.
Trade FX Options long or short
At Fab Investing, Forex Options can be either bought or sold.
FX Options can be traded from the FX Options Board
The FX Options Board covers maturities from 1 day to 6 months in standard tenors and strikes. Other maturities and strikes are available in a separate trade ticket or as Request For Quote (RFQ).
Innovative FX Options Board
- 'Click and Trade' solution built into Fab Investing’ trading platforms.
- An intuitive and customized workspace displaying both FX Vanilla Options in dedicated views.
- A matrix of quotes across wide range of standardised maturity dates and strikes.
- An overview of net open positions.
Allows you to continuously monitor prices on multiple contracts.
Choice of settlement
At Fab Investing, we support New York cut FX Options which expire at 10:00 New York time. Any FX Options that are "in the money" at this time are exercised automatically and converted into spot positions for trading convenience.
Alternatively you may choose to exit the position via the cash exercise method. In this way your position is exited at the mid-price of the current spread – even in volatile markets.
Guided by data
To enhance the FX Options trader’s understanding and ability to profit from FX as an asset class, Fab Investing provides direct access to over-the-counter (OTC) FX Options interbank market-specific information and data on our clients’ positions.
Make your strategy come to life
Fab Investing’s FX Options Board puts everything you need right before you, with standard maturity dates and strike prices that make it easier to see the most liquid Forex Options.
Simply scroll up and down the strikes and across the maturities to select the Forex Option you wish to trade. Find your next trading strategy effortlessly either horizontally, vertically or diagonally. Other strikes and maturities remain available to you with streaming liquidity through the Forex Options trade ticket on the platform.
Forex Options prices are consistently delivered in an intelligent and dynamic way. Explore the many new features with the magnifier icons below.
Five ways to analyze your combined Options and Spot portfolio
Fab Investing has built a professional-grade set of reports that offer invaluable information if you are taking a portfolio-based approach to trading a combination of FX related products. These reports allow astute investors to manage their risk exposure and reflect their market view efficiently in their trading.
Detailed analysis at your fingertips
Forget about messy spread sheets. Put away your pocket calculator. Now you can simply log into your platform and access professional-grade risk matrixes in the FX Options Report, giving you a detailed analysis of your FX and FX Options positions. You’ll be able to quickly gauge your exposure to various factors under a range of scenarios, enabling you to control risk and more accurately reflect your market view in your trading.
- Summary Per Cross aggregates all positions per currency pair, and shows a global view of the risk in each pair
- Net delta by Currency shows the delta triangulation risks to identify the cross a portfolio is most exposed to
- Summary per Position displays a table showing the market sensitivities per individual position to identify the root of specific exposure
- Spot ladder clarifies the sensitivity of the portfolio
- Spot/Volatility Grid gives a two dimensional view of portfolio sensitivity Get this free as a Fab Investing client.
Discover our FX Options Report here.
How Fab Investing determines margin for FX Options
DELTA MARGIN + VEGA MARGIN
The Delta of a Forex Option position describes how the value of the Forex Option changes as a result of changes in the underlying Forex spot rate. The Delta Margin requirement is calculated as follows:
DELTA MARGIN = DELTA EXPOSURE X FOREX SPOT MARGIN REQUIREMENT
When calculating the Delta Margin requirement, all of the portfolio's current spot exposures – both open FX spot positions and FX Vanilla Option spot exposures – are considered.
The Vega of an FX Vanilla Option position describes how the value of the Forex Option position changes as a result of changes in the implied volatility of the underlying Forex cross. The Vega Margin is calculated as follows:
VEGA MARGIN = NOTIONAL AMOUNT X VEGA X MAX (IMPLIED VOLATILITY, 20%) * VOLATILITY FACTOR
Volatility Factors are set per Currency Pair and Expiry Date tenor (see table below). Between these Expiry Date tenors the Volatility Factors are interpolated. The Volatility Factors for short dated Expiry Dates are higher than those for long dated Expiry Dates because the volatility of a long-term Forex Option position is relatively less dynamic than a short-term Forex Option position.
When calculating the Vega Margin requirement for a Forex Option position, netting is performed across each Currency Pair for each Expiry Date. Thus, if you have bought and sold Forex Options in the same Currency Pair and for the same Expiry Date, the Vega Margin is calculated as the net of these positions.
The Volatility Factors used in the Vega Margin calculation for major and minor currency pairs are shown below in tabular and graphical form. As noted above, Volatility Factors are interpolated between the expiry date tenors.
Listed below are instruments available on the FAB InvestingTrader platform.