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Aug 09 - 04:55 AM

GBP/USD - Binary Options Bring Big Rewards And Outlook Clues

By Richard Pace  —  Aug 09 - 02:39 AM
  • Double-no-touch options are a short volatility trade, only risk a premium

  • They pay a fixed amount if 2 range parameters not touched by expiry

  • Last week we highlighted 5:1 return from 1-week 1.38-1.40 DNT nL1N2P90PC

  • Trade relied on big support/resistance before these levels

  • That option set to expire at 10-am New York Monday, will reward holders

  • Implied volatility fell sharply last week and stays heavy

  • That's limited returns from short volatility, raised cost of DNT options

  • But does suggests limited and familiar ranges likely to persist for now

For more click on FXBUZ


GBP/USD 1-month expiry option implied volatility Click here

Source:
Refinitiv IFR Research/Market Commentary

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