FxWirePro: Bullish engulfing on EUR/AUD- hedge with option straps

Technical Glance:

After an intermediate downtrend in last to last week, bulls are back on track to form an engulfing bullish candle with long real body at 1.5062 levels to signify bullish turn because prices hesitated their move downward by increasing significantly during the week. We waited for more clarity by leading oscillators but they suggested indecision on weekly charts. 

Currency Option Strategy:

For now convert the option strips which were advised a fortnight ago into straps on hedging grounds as we don't want to buck the trend and the trend remains uptrend. Hence, combinations allow adding both calls and puts at a time in our strategy unlike spreads.

So, Buy 15D At-The-Money -0.51 delta put option and simultaneously short 2 lots of 15D 0.51 delta At-The-Money delta call options.

It involves buying a number of ATM puts and double the number of calls, ATM instruments because of Vega advantages so as to have high chances of more options sensitivity. The strap is more of customized version combination and more bullish version of the common straddle. Hence, any hedger or trader who believes the underlying currency is more likely to surge upside can go for this strategy.

Maximum returns can be achievable when the underlying exchange rate makes a strong move either upwards or downwards at expiration but with greater gains to be made with an upward move. Cost of hedging would be Net Premium Paid + brokerage/commission paid.