Use Option Strips for AUD’s appreciation

As it is sensed that Aussie dollar may attempting to look superior over Euro in medium term future, we advise to hedge the Euro's depreciation over AUD through below recommendations.

Option Strategy: Option Strips (EURAUD)

The strip is more of customized version combination and more bearish version of the common straddle.

It involves buying a number of near month ATM calls (strikes at 1.4567) and double the number of near month puts.

Unlike spreads, combinations allow adding both calls and puts at a time in our strategy.

It is a combination the option instruments are to be of the same underlying currency, strike price and expiration date.

Huge profits achievable with the strip strategy when the underlying currency exchange rate makes a strong move either upwards or downwards at expiration, with greater gains to be made with a downward move.

Hence, any hedger or trader who believes the underlying currency is more likely to plunge downside can go for this strategy.

Cost of hedging would be Net Premium Paid + brokerage/commission paid.