The foreign exchange market is the worlds largest market with daily turnover exceeding trillions. With non-stop trading opportunities from Monday to Friday one can take advantage of several profitable set ups within the week. This can be done either by analyzing the fundamentals or technicals of underlying currency pairs. Options present one with the added advantage that one's risk is limited to the amount invested. This study looks at the advantages of exotic options as a tool in Forex trading. By taking the buy-sell decision out of the equation these options offer some key advantages over their regular counterparts.
Inhaltsverzeichnis (Table of Contents)
- Title
- Introduction
- Literature Review
- Dollar Fundamentals
- Foreign holdings of dollar assets
- Interest Rates
- The carry cost, yield and bond spreads
- Dollar Technicals
- Advantages of trading the forex market over equities and commodities trading
- Instant and Accurate Execution
- Commission free trading
- 24 hour liquid market
- Powerful Leverage with limited risk
- Options
- Types of Barrier Exotic Options Available
- Advantages of User Defined (Exotic) Options
- Option Premiums, Pricing, Volatility and Trading
- Research Objective
- Methodology
- Research Design
- Results
- Analysis
- Discussion
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This dissertation aims to determine whether user-defined exotic options offer specific advantages in forex trading compared to traditional options. The research investigates the potential benefits of these options within the context of the global forex market's unique characteristics.
- Advantages of exotic options in forex trading
- Comparison of exotic and traditional options performance
- Impact of market volatility on option pricing
- Analysis of fundamental and technical factors influencing forex prices
- The role of user-defined parameters in optimizing trading strategies
Zusammenfassung der Kapitel (Chapter Summaries)
The Introduction establishes the context of the forex market, highlighting its size and importance. It briefly touches upon the role of currencies in global economics and the impact of various factors on currency movements. The Literature Review surveys existing research on forex market drivers, including macroeconomic announcements, speculator sentiment, and interest rate differentials. It also discusses the increasing popularity of forex options and the different types available. The chapter on Dollar Fundamentals explores the key economic factors influencing the value of the dollar, such as interest rates, foreign holdings of dollar assets, and the carry cost. The section on Dollar Technicals discusses the application of technical analysis to forex trading. The chapter on Advantages of trading the forex market over equities and commodities trading details the unique benefits of forex trading, such as 24-hour liquidity and leverage opportunities. The chapters on Options and Types of Barrier Exotic Options Available provide an overview of different types of options, focusing on exotic barrier options. The chapter on Advantages of User Defined (Exotic) Options explores the reasons for the rising popularity of user-defined exotic options. The Methodology section outlines the research approach and design employed in the study. The Results section presents the findings of the empirical analysis. The Analysis section interprets the results.
Schlüsselwörter (Keywords)
Forex trading, exotic options, barrier options, currency trading, volatility, hedging, option pricing, technical analysis, fundamental analysis, user-defined options.
- Quote paper
- Rajveer Rawlin (Author), 2005, Do Exotic options offer any specific advantages in Forex trading?, Munich, GRIN Verlag, https://www.grin.com/document/182029
