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Originally Posted by James
1. Buy euro now at market (1.2950) with 150 pip stop loss at 1.2800 using 2x leverage.
2. Buy a "one touch " (OT) option which pays 300 pips if the market touches 1.2800 before Friday next week cost is 137 pips
3. Buy a "double touch" (DT) option which pays 300 pips if the euro touches 1.2700 or 1.3200 before Friday next week cost 116 pips
So if the euro rises to 1.3200 we make 250 pipsx2 on the trade plus 300 pips for the DT option. The cost has been 253 pips for the two options. Net result +550 pips
If the euro falls to 1.2800 we lose 150 pipsx2 on the trade make 300 pips on the OT option. The cost of the OT option has been 137 pips. Net result -137 pips
If the euro falls further to 1.2700 we make 300 pips on the DT option. The cost of the DT option is 116 pips. Net result +184 pips.
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What if EUR/USD falls to 1.2805 then trades between 1.2805 to 1.2865 before the options expire after they do takes a further plunge to 1.2600?
Sorry I posted the above before I read that ForexTractor had already described the scenario I talked about.
Good to see wise people like novice still around to counter these guys pumping exotic options.
