Options are available for currencies Oct.16/07
Forexmentor.com Forex Trading Price Action
www.forexmentor.com News: Options are available for currencies, as they are for other asset classes. For example, there are puts and calls on the Canadian dollar – fondly referred to as the loonie. You could have taken a stake in the Canadian dollar early on this year (2007) by purchasing a call option on a million Canadian dollars, at a time when the currency was trading at US$86.73. Conversely, had you done the same with a put – gambling that the loonie was going to fall – you would have ended up with a bad case of heartburn.
Trading futures can be profitable, but losses can also be limitless. Take, for example, sugar in the 70s. It went ‘limit up’ every day for more than 60 days in a row. Talk about taking your breath away. At no point could traders get in, and close their trades, because the daily limit was reached at the start of each trading day, and the window was then closed. That effectively meant that trading was over at the start of each and every one of those 60-odd days. If a trader owned a put – betting that sugar would fall – that trader was caught up in a never-ending nightmare of meeting margin calls, or going bankrupt, as there was no opportunity at all to close the trade for what must have seemed like eternity.
Source: National Post, Fred Langan – Sat., Oct. 13/07
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