AUDCHF bearish swings have been a slant decline, it forms downward channel with a distance of around 1500-1700 pips.
As and when the pair has rejected several times at the channel resistance bears have evidenced considerable dips towards channel baseline.
With above technical reasoning, use this strategy as AUD/CHF long term bearish environment holding stronger despite intermediate attempts of bulls taking over rallies and wish to earn capital gains.
Currency Hedging Framework:
For now, downtrend in long term is certain with abrupt rallies, so we are capitalizing on this ongoing downtrend by using recovery rallies with an objective of profit maximization.
It can be attained formulating AUDCHF options combinations if you think you are running short of capital exposure for spot FX shorting, well..., yes you can very well do the same utilizing derivative combinations (both call and put) so as to leverage extraction.
We nearly replicated the short spot FX position by buying OTM puts and selling OTM calls. The net result is a virtually nil cost or even net credit trade that has uncapped risk potential as the EURGBP rises.
AUD/CHF spot FX is currently trading at 0.7168. Buy 1M 1.5% out of the money -0.49 delta puts and simultaneously sell 1.5% out of the money calls with comparatively shorter expiry (probably 7, 10 or 15 days' time frame as suitable conditions).
Advantage: With this strategy, you use no capital or negligible capital and yet are able to simulate a short spot FX position, and the ability to leg in and leg out as you wish.
Risk/Reward Profile: The risk is uncapped if the pair rises towards north, while the reward equals lower strike plus net credit, or less net debit.


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