FxWirePro: Smart ways to construct NZD/JPY put ladders – Avoid ITM shorts on lower IV

Contemplating the puzzling trend in this pair, we've already advocated constructing put ladders so as to present leveraging effects in profitability.

As a result, 1 lot of short ITM + 2 lots of ATM put longs were suggested accordingly.

Observation:

Good sign for put option writers: Prices remained sideways or slightly swinging up (see daily technical charts), while the pair is likely to perceive IV closer to 14% hich is inching lower from last weeksl 17%.

What we could now foresee is that the time for those active long positions in ATM and OTM puts with longer tenors even though some abrupt minor rallies may be expected.

Here are the ways in which one can build and develop fresh put ladders regardless of swings.

For now instead of shorting in the money contracts in the strategy prefer ATM instruments as the pair has already rallied a bit.

If you add ITM puts on short side then they may be at risk of exercise, but those who've already deployed ITM shorts in the recent past, you have nothing worry about this now as they've expired worthless.