Option Currency Hedging and speculating:
For today, no doubt upswings are attempting to bounce above 21DMA but casted-off at 181.205 levels on this pair in abrupt but any continued downswings may turn adversely as we think the current downtrend holds stronger, so we've tailored our formulation of strategies as the risk appetite varies from different investors to different traders.
The naked at the money put option with 7 days expiry was highly sensitive to moves in the underlying exchange rate of GBP/JPY when gamma was at around 0.39.
1W ATM volatility is perceived at 7.14% and it is likely to increase in long run (for next 6 months to 1-year span).
Because in the sensitivity table gamma shows how much the delta will shift for a corresponding underlying rate moves by 1%.
With reducing volatility gamma adds to the risk and reward profile for both holders and writers.
Thus, on a hedging perspective in long term, using gamma factor in order to neutralize volatility factor, put back-spreads are advocated so as to reduce the sensitivity and focus on hedging motive.
Hence, go long on 2W 2 lots of at the money -0.50 delta puts with gamma at 0.39 and simultaneously shorting 3D Out-Of-The-Money put option is recommended to reduce the cost of hedging by financing long position in buying At-The-Money Puts.
However, speculators no worry to break your head, one touch 0.47 delta calls will come in your way to add leveraging effects of today's rallies but don't expect targets not more than 181.215, play these instruments for anything below these levels.


AUDJPY Soars Past 112 on BOJ Rate Hike, Technicals Signal Bullish Momentum
EUR/USD Dips Below 1.1500 Amidst Divergent Central Bank Policies and USD Strength
FxWirePro- Major Pair levels and bias summary
FxWirePro: GBP/USD gains some traction after UK retail sales beat expectation
AUDJPY: Bearish Bias Persists Despite Pullback; Sell on Rallies Near 110.78-80 Resistance
FxWirePro: EUR/AUD downside pressure builds, key support level in focus
NZDJPY: Bearish Trend Favors Sellers on Rallies Near 90.18-20 Resistance
FxWirePro: GBP/AUD falls after BoE rate hold
FxWirePro- Woodies Pivot (Major)
FxWirePro: USD/ZAR slips as rand benefits from steady commodity prices
FxWirePro- Major Crypto levels and bias summary
FxWirePro: GBP/USD falls after BoE holds rates and warns of further hikes
FxWirePro: USD/JPY rises as yen weakens following BOJ's 25bp rate hike
NZDJPY Surges Past 90 Amidst BOJ Rate Hike Uncertainty
USD/CHF Blasts Past 0.8250: Technicals Signal Next Stop at 0.8340
FxWirePro: NZD/USD edges lower, remains on back foot




