As you could spot out the implied volatilities of EURCHF ATM contracts from the nutshell evidencing IVs the contract of this underlying pair of all expiries have been the least among G10 currency segment.

While, the 25-delta risk of reversal of EURCHF has also not been indicating any dramatic shoot up nor any slumps, but seems to be one of the pairs to be hedged for downside risks as it indicates puts have been relatively costlier.

EURCHF’s range bound pattern is still persisting but some bearish candles are indicating slight weakness on both weekly and monthly charts on technical base, (Ranging between upper strikes 1.1199 and lower strikes at around 1.0235 levels.

But on the contrary, gradual euro strength should nudge EURCHF higher. The litany of European political risks next year, coupled with the potential for global market volatility from rising US dollar and US yields, suggests that CHF should stay supported in H1’17, but gradual euro strength in the latter half of the year should help drive EURCHF back towards the recent 1.12 high.

For now, we could still foresee range bounded trend to persist in near future but little weakness on weekly charts is puzzling this pair to drag southward targets but very much within above-stated range.

As a result, we recommend below option strategies using right options, thereby, one can benefit from certain returns.

Naked Strangle Shorting:

Short 1W OTM put (0.5% strike difference referring lower cap) and short OTM call simultaneously of the same expiry (0.5% strike referring upper cap) (we reiterate, preferably short term for maturity is desired).

Overview: Slightly bearish in short term but sideways in the medium term.

Time frame:  7 to 10 days

Alternatively, one can also prefer iron condor on the same lower IV circumstances. To execute the strategy, the options trader buys a lower strike OTM put, sells a middle strike ATM put, sells a middle strike at-the-money call and buys another higher strike OTM call. This results in a net credit to put on the trade.