KNOWLEDGE BASE

WE BUY AN OPTION. FULL INSTRUCTIONS

The trading interface of one of the brokers, a large investment bank is used as an illustration. In this training course, we do not consider why and why we buy and sell options. For you – our clients, the main task is to correctly implement the options trading recommendations you receive from us. You can read more about options trading in 4 articles on our blog. this link.

Full explanations of why and why WE BUY options in this article.

Let’s move on to examples. We consider your actions when BUYING a CALL option.

Buy a CALL option

Example of a recommendation from us:

22.02.23; 07-30 London time

NEW RECOMMENDATION

Option EURUSD; CALLBUY; Strike – 1,0625; Expire – 15.03.23;  Cost now – 0,0093 points

In this picture you can see that to go to options trading in the trading window you need to click the far right button at the top. Clicked. You set all the parameters of the recommendation you received from us to buy the option. Attention about the trading amount! Each client knows the size of his trading position, which he can work with, observing our risk management rules. If the recommendation does not indicate the value “0,5 sum” or “0,5 usual pos”, this means that you are buying or selling the option with your usual position. We remind you that for clients with a trading capital of 5000,00 USD and 1000,00 USD, the standard trading position is 100000,00. If “0,5 sum” is indicated in our recommendation, it means you are placing orders on the FX spot or working with an option with an amount of 50000,00. Owners of larger trading accounts are guided by the rule from our risk management table.

Let’s start setting the parameters.

Currency pair: EURUSD. OK.

Type: Vanilla CALL (not to be confused with PUT). OK. Why vanilla? Briefly: because it is not binary.

Strike: 1,0625. OK

Expiry date: 15 Mar 2023. OK

In the next section we see a button where the cost is indicated 0,0093 item and the inscription “BUY”, and below how much we will need to pay to purchase this option. 0,0093 points corresponds 936,00 USD for 100k

We carefully check all the parameters set and press the “BUY” button. After clicking the button, we receive confirmation from the broker that the transaction has been completed.

We perform exactly the same operation when BUY option PUT. Just in the “Type” section instead of “Vanilla CALL” we put “Vanilla PUT”. That’s all. Of course, the parameters “Currency pair”, “Strike”, “Expire” will be different, the operation of pressing the “BUY” button will remain unchanged.

Example of a recommendation to buy an option PUT

02.03.2023; 07-50 London time

NEW RECOMMENDATION

Option USDCAD; PUTBUY; 0,5 sum; Strike – 1,3615; Expiry – 23.03.23/0,0108,5. Cost now – 0,0108,5 points.

Here, when preparing to purchase this option, you need to turn the slider to “Vanilla PUT”, and pay attention to the recommendation for the amount you need to bet. “0,5 sum”, which means that in this recommendation, if you, say, usually trade an amount of 100k, then here you need to trade half, that is, 50000,00.

All values ​​have been set, rechecked, clicked the “BUY” button and received instant confirmation from the broker, you continue to do your main business.