Sucden Financial has recent launched OTC FX options to compliment it’s deliverable FX offering.
But what are they and how can they be used?
Sucden’s OTC FX options are basically a more flexible version of traditional foreign exchange options traded on exchange.
The disadvantage of trading FX options on exchange is that you are restricted to the currency pairs, strike prices and exercise dates which are pre set by the exchanges.
The advantages with OTC options you can request specific dates, sizes and some more exotic currencies, which can help funds, companies and trades hedge more effectively and include benefits such as:
- Extended product coverage with over 120 tradable FX option types
- Pricing derived from aggregated multi-bank and non-bank price liquidity
- Custom hedging service, tailored to suit passive and active strategies.
- Coverage across multiple currency pairs including exotics and NDOs
- Extended tenors to facilitate long-dated strategies
- Dynamic margining
OTC options are generally reserved for big hedges and a little over kill for general speculation.
Brokers such as IG and Saxo offer FX options for speculation online.
OTC FX options should no be confused with binary FX options with are completely different. These are short term limited risk bets on where a currency pair will go up or down. Established brokers like Spreadex (Read our Spreadex Review…) and ETX offer binary options and are fully regulated by the FCA.
Never trade binary options (or anything else for that matter) with a broker that is not fully authorised and regulated by the FCA. Make sure they are not a Cypriot offshoot passporting their regulation to appear regulated in the UK too.
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Having worked as a broker at Investors Intelligence and a multi-asset derivatives broker at MF Global (Man Financial), Richard has acquired substantial experience in the industry. His career began as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson), following internships on the NYMEX oil trading floor in New York and London IPE in 2001 and 2000.
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