Indispensable for mastering FX trading! Mr. Rikio Shima explains in detail the knowledge regarding NY option cuts

Mr. Rikio Shima also states in the video that although you may come across information online about FX claiming “NY Option Cut (currency option trading on the US New York market) has a significant impact on FX currency movements,” there are hardly any articles that explain the underlying basis in detail.

To trade FX effectively, you need knowledge of various fundamentals and technical analyses, and the more you have, the more you will improve, no doubt. Among that knowledge, Mr. Rikio Shima provides a detailed explanation of NY Option Cut in a video, so I would like to urge FX traders to watch it and learn from it.

Now, before talking about NY Option Cut, what is an option? Some of you may not know yet, but don't worry.

For my part, about three years ago, a well-known investor was trading Nikkei 225 options, and to interview him I searched various websites to understand how options trading works, and I was able to grasp the mechanism in a few hours, so just search “FX, or Nikkei 225 options” and you’ll be fine.

Now, I’d like to return to the main topic.

　NY Option Cut (currency option trading on the US New York market) refers to the currency futures options on currencies such as EUR/USD and USD/JPY traded by American banks and financial instrument traders. Because these are futures options, they give rights to buy or sell at a future date for a specified amount of dollars. Given that these are trades by the world’s largest FX market participants in the US financial institutions, the trading volume is enormous, and it’s easy to imagine the substantial influence they have on FX currency movements. Data like in the figure below.

Rikio Shima’s Investment SalonRikio Shima's Practical Real Trades regularly presents this information several times a week and explains whether it influences FX price movements, but in this video the mechanism is explained so that it sticks in your mind. You will understand after watching the video a few times.

To give you a sense, around strike prices where large options positions exist, price movements tend to stagnate.

In addition, FX currency prices tend to move in a way that seems drawn toward larger option strike prices.

Furthermore, when FX currency prices move away from the strike price, there is said to be a strong tendency to move rapidly in one direction.

If you know the mechanism of NY Option Cut’s influence on FX price movements and keep the constantly changing volume at strike prices in mind while trading FX—with other technical and fundamental analyses in mind—your ability to gauge price direction and timing will improve even more, and it’s natural that your FX trading skills will rise.

I think this is a must-watch video for FX investors.

Written by Hayakawa

【FX動画】Rikio Shima Teaches Professional Knowledge! How to Use Option Information in Trading? (1)

【FX動画】Rikio Shima Teaches Professional Knowledge! How to Use Option Information in Trading? (2)