FxWirePro: AUDNZD Options Trade Perspectives

AUDNZD Strangle Shorts: As you could observe the swings in the major trend have been oscillating between 1.1423 and 1.0333 levels since June 2015, it is wise to deploy (0.5%) out-of-the-money call and (0.5%) out-of-the-money put options of the 1m tenor as shown in the diagram. The strategy can be executed at the net credit and certain yields would be derived in the form of initial premium received as long as the underlying spot FX remains between OTM strikes on the expiration.

3-Way Straddles Versus ITM Puts: Considering non-directional movements in the underlying spot FX (refer above chart), 3-way straddles are advocated, the strategy comprises of at the money +0.51 delta call, at the money -0.49 delta put options and short in the money put options of narrowed expiry with a view of arresting potential FX risks on either side but capitalizing on minor upswings in the near-term. Hence, on hedging grounds, buy 2m ATM delta puts and ATM delta call of similar tenor and short (1%) in the money put options of 1w are advocated.

Currency Strength Index: FxWirePro's hourly AUD spot index is inching towards 89 levels (which is bullish), while hourly NZD spot index was at 131 (bullish) while articulating (at 14:38 GMT).

For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex