FxWirePro: EUR/CHF low IV tactics- either short straddles or condor spreads to generate certain yields

Swiss manufacturing PMI has been weaker, printed at 48.7 against forecasts at 50.6 and previous flash at 50. As shown in the nutshell EURCHF may likely to experience low volatility in near future and in long term as well, EURCHF is to have the least IV among the major currency pool.

We predict sideway swings but marginal upswings on daily charts with clear converging signals from RSI (14) and stochastic curves. Although there is no trace of drastic or dramatic movements on either side we still sense some sort of upward momentum. Range bounded (1.0646 - 1.0530) trend is expected.

Since the EURCHF's implied volatility is perceived to be minimal (EURCHF IV of ATM contracts are perceived to remain in the range of 6.5 to 7.5%), so here comes a multiple leg of option strategy for regular traders of this currency cross when there is little IV. A total of 4 legs are involved in the condor options strategy and a net debit is required to establish the position.

The trader can execute this strategy using call options with similar maturities. So strategy goes this way, writing an In-The-Money call and buying deep striking in-the-money call, writing a higher strike OTM calls and buying another deep striking out-of-the-money call for a net debit. Or short 7D ATM calls and 7D ATM puts for a net credit.