Forex Options Course

ABE COFNAS has been the forex trading columnist for Futures magazine since 2001. He also formed Learn4x.com—one of the first Web-based interactive training sites devoted to forex trading—in 2001, and currently manages a global forex trading team and call room at www.fxdimensions.com. He is founder of www.currencygames.com, a global forex currency game company that combines challenges and training. Cofnas is head forex coach at www.secretsofforextraders.com and the author of The Forex Trading Course (Wiley).

• Preface ixAcknowledgments xiAbout the Author xiiiPART ONE Key Option Elements 1CHAPTER 1 The Elements of an Option Trade 3Plain Vanilla Options 3Purchasing an Option 3Writing an Option—Beginners Don’t 8Elements of an Option Trade or Ticket 10The Greeks 15Summary 23CHAPTER 2 What Affects Forex Option Prices? 25Time 25Volatility 27Summary 50PART TWO Forex Market Drivers 51CHAPTER 3 Finding Direction for Your Forex Option Trade 53The Importance of Interest Rate Expectations 53How to Anticipate the Direction of the Federal Open Market Committee (FOMC) 54How to Use Housing Sector Data for Developing Forex Option Trade Direction 62Evaluating Real Estate Exchange-Traded Funds (ETFs) 71Summary 77CHAPTER 4 Tracking Fundamental Directions 79Using Currency Targeted Exchange-Traded Funds (ETFs) to Determine If the Market Is Dollar Bearish or Bullish 79Diagnosing Global Economic Conditions 83Group Currencies by Purchasing Power Parity (PPP) (Big Mac Index) 84Tracking the Currency–Commodity Connection 94The Currency Outlook Checklist 97Summary 98PART THREE Timing the Trade with Technical Analysis 99CHAPTER 5 Chart Patterns and Trade Entry 101Chart Patterns and How to Use Them 101Scanning for Volatility 110Summary 114CHAPTER 6 Using Experts to Shape Trading Decisions 115Forecasting Accuracy? 116Professional Sources of Expert Forex Opinion 117Follow the Housing Prices 122Follow the Think Tanks 124Follow the Bank Forecasts 125Summary 128PART FOUR Forex Options Strategies 129CHAPTER 7 Vanilla, Spreads, and Volatility Strategies 131Plain Vanilla Strategies 131Currency Pair Spreads: Playing the Correlations and Divergencies 133Commodity–Currency Spread Strategies 139Carry Trade Option Strategies 144Trading Delta Call/Put Ratios 147Trading Vega or Volatility 150Gamma Spread Trading 154Key Forex Option Combinations and Components 156Summary 163CHAPTER 8 Binary Option Strategies 165What Is a Binary Option? 166Using Exotics to Derive Market Sentiment 170Combining Binary Options with Plain Vanilla and Spot Trading 173Summary 177CHAPTER 9 Option Strategies for Extreme Outcomes and Scenarios 179Recession in China or Continued Boom 179Option Trading to Play Carry Trades with Hedge—Putting on Collars 181$ 1000 + Gold and $200 + Crude Oil 182Trading $Oil Shock ($200) in Forex Options 183Play a U.S. Stagflation and Inflation 184Preemptive Attack on Iran 184Recovery of Housing 185Summary 185CONCLUSION Putting It All Together 187Achieving Optimal Forex Option Trading Fitness 187Forward Testing Your Forex Option Trading Fitness 188Where to Trade Forex Options 189APPENDIX Selected Futures Columns 191Index 213