“Gain on short term recovery as well as long term slumps” with Currency Option Strategy

Considering our recent technical purview of GBP/USD currency cross, it is recommended to hedge the long term downside risks and short term upswings of this pair with below currency strategy.

Yes indeed, this is how fund managers mint money irrespective market momentum being bullish or bearish.

Smart hedging: Long Put Calendar Spread (GBP/USD)

How do we build this strategy:

Short one near term put option + Long another put option with a more distant expiration.

The strategy most commonly involves puts with the same strike (horizontal spread), but can also be done with different strikes (diagonal spread).

Correlating the above technical analysis as we are expecting for either a steady to slightly rising currency price during the life of the near-term option. (Daily chart)

Further tumble during the life of the far month contract or a sharp rise in implied volatility levels. (Weekly chart)

This strategy combines a longer-term bearish outlook with a near-term neutral/bullish outlook.