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The Forex Edge by James Dicks

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CHAPTER 24FOREX OPTIONS STRATEGIES

Forex and options can be a highly profitable combination because of the high level of volatility of most forex currency pairs. A basic forex options strategy will always start with vanilla options: buying a call or a put, which expresses the bullish or bearish views of the trader in regard to the potential direction of the exchange rate of the currency pair. This is the easiest strategy, and it can be used by itself when the direction of a particular market is clear and trending.

For example, in front of a clear reversal candle pattern, which could be a double top, we can simply buy a put option, since we are looking to short the currency pair. The potential loss is limited to the premium we have paid, and its ...

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