Although the prices of USDCAD are trying bounce from last 2 weeks, now remained well below 21DMA that has pulled back into the sideway range lasted for 7 weeks.
Lower IVs of ATM contracts have been lacklustre (1w tenors showing 8.8%) and seem like below 10% in long run.
Any huge disparity exists between option premiums and IVs should a raise a cause of concern as to whether spot FX would move in sync with risk reversals or not.
As we foresee narrow range trend is puzzling this pair on both intraday and weekly charts,
It also shows the neutral risk reversals which indicate underlying spot FX is anticipated to remain in the existing range.
The OTC options market appeared to be more balanced on the direction for the pair over the 1m to 1y time horizon.
Contemplating the tepid IVs the iron condor option strategy appears to be more suitable in current trend of USDCAD.
So, go short in OTM put and long in deep OTM put, simultaneously, go short in OTM call and long in deep OTM call of similar expiries.
These positions may result in a limited risk, and in non-directional trend to have the large probabilities of earning the limited returns when the underlying spot FX is perceived to have low volatility.
The iron condor strategy can also be visualized as a combination of a bull put spread and a bear call spread.
Maximum returns for the iron condor strategy is equal to the net credit received when entering the trade.
Maximum profit is achievable when the underlying spot fx at expiration is between the strikes of the call and put sold. At this juncture, all the options would expire worthless.


Meta and Google just lost a landmark social media addiction case. A tech law expert explains the fallout
Time to buy local: war fuel price shocks reveal the folly of a long food supply chain
US-Iran Ceasefire Talks Underway: What You Need to Know
Trump’s "Shock and Awe" Agenda: Executive Orders from Day One
Mexico's Undervalued Equity Market Offers Long-Term Investment Potential
Moldova Criticizes Russia Amid Transdniestria Energy Crisis
Goldman Sachs Raises Oil Price Forecasts Amid Strait of Hormuz Disruptions
Goldman Predicts 50% Odds of 10% U.S. Tariff on Copper by Q1 Close
Federal Reserve Balance Sheet Reduction: Brookings Research Outlines Possible Path Forward
Makemation: a Nollywood movie that shows AI in action in Africa
Gold Prices Slide as Rate Cut Prospects Diminish; Copper Gains on China Stimulus Hopes
China's Refining Industry Faces Major Shakeup Amid Challenges
Stock Futures Dip as Investors Await Key Payrolls Data
S&P 500 Relies on Tech for Growth in Q4 2024, Says Barclays
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed
Global Markets React to Strong U.S. Jobs Data and Rising Yields




