Forex Options

[kuepper]

I have been looking into trading Forex options for awhile now, and it seems that there are two main types: SPOT options, and regular options. I know that the SPOT options usually have better prices and liquidity, but you cannot trade them before their expiration period. I was just wondering how much of a difference there is between the two in terms of price and liquidity, and any other differences (if any).

Thanks,
Justin

[mishak]

Hello kuepper

What do you mean SPOT options ? Regular options ? Please clarify.
Are you trading on an exchange, or OTC or some kind of betting platform?

Thanks

[kuepper]

SPOT options are in an OTC market, but you can't sell options once you buy them (like normal options). I know there are some betting platforms that work in a similar manner, but their option prices are ridiculously high.

[mishak]

You mean SPOT option is just 1-day expiration option ?
If you cannot sell it - it looks like a bet.
Never heard of them, you better ask the guy who is selling them to you.

Just a thought:
If you cannot sell it, then there is no liquidity.
If there no liquidity, it means the prices are high.

Talke care and have fun

[kuepper]

SPOT stands for Single Payment Option Trading. You can set the amount of days/hours before expiration. Fairly large brokerages offer it - most notably RefcoFX (http://www.refcospot.com). I realize it is somewhat like a bet, and there are some websites that sell them like bets. But, the reputable brokerages use industry standard pricing models to calculate the prices. Basically, if I go with the brokerages, it sounds like they offer the options directly from them, instead of via larger exchanges. Granted there is no liquidity (which is the only drawback I see), I think the cheaper minimum contract sizes make up for that.

In my demo account yesterday, I bought a Euro put option for 1.2400 for 35.31, and received 100.00 payment... Obviously not "usual results" but I will continue testing it anyway.