All the while, we've only risked the initial cost of each option contract (another serious benefit of currency options).
Baltimore, MD (Vocus) July 16, 2009
Yesterday, Global Currency Options Alert editor, Ashish Advani explained to his readers how to short the Mexican peso with just released put options now available on the NASDAQ OMX (Philadelphia Stock Exchange).
However, according to Advani, these new Mexican peso options are just part of the story. In fact, the NASDAQ OMX just launched three other new currency options this past Monday.
For the past two years, investors have only been able to buy these stock-like currency options on six currencies: the euro, pound, Swiss franc, Australian dollar, Canadian dollar, and Japanese yen.
But on Monday, the NASDAQ OMX introduced call and put options on FOUR new currencies including two exotic currencies…
· Mexican Peso
· New Zealand Dollar
· South African Rand
· Swedish Krona
The Philly Stock Exchange first introduced these "stock-like" currency options back in July 2007 – a full two years ago this month.
"The Philly Exchange was not the first to introduce currency options, but they were the first to offer 'stock-like' currency options that trade just like options on your favorite shares of IBM or Coca-Cola," says Advani.
These "stock-like" options trade as closely to stock options as possible. One can buy these currency options at the same times as stock options every day (9-4:30 EST five days a week), have the same expiration dates (third Friday of the month), and they're dollar-denominated, so they're settled in dollars just like any stock option.
"Just like regular stock options, the risk in buying these options is strictly limited to amount paid for the option or the 'premium.' If the option were to expire worthless, one would only lose their initial investment."
Also, they're available through any options-approved stock account. "This means you don't have to open a new account if you're already trading stock options," says Advani.
According to Advani, what's exciting about currency options is that "such leveraged products truly have the potential for larger gains. In fact, regular retail investors have the potential to make double or triple-digit gains off such options."
"In other words, one can make Forex-type gains on these options with fewer trades a year."
For example, just in the past nine months, Advani explains that his Global Currency Options service has used these types of "stock-like" currency options to grab gains of 92%, 105%, 114%, 135%, and up to 213% on single currency plays. "All the while, we've only risked the initial cost of each option contract (another serious benefit of currency options)."
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