Option Arbitrage in the Forex Market

What is arbitrage? Arbitrage is the simultaneous buying and selling of identical financial instruments taking advantage of price discrepancies between different brokers, exchanges, clearing firms, etc. and thus locking in a profit. On paper, arbitrage is a risk-less trading strategy. In the real world however, risks abound.

So why trade arbitrage? Well, if the risks can be managed, arbitrage can be extremely profitable if you can find the opportunities and take advantage of the opportunities before they disappear. After all, the arbitrage opportunity is present because one side is slow to react to market news, momentum, etc. When it corrects the opportunity is gone.

Why arbitrage forex options? Well, because the opportunity exists if you look far it. The forex market is a cash inter-bank / inter-dealer market. In simplest terms, this means the foreign currencies traded in the forex market are traded directly between banks, foreign currency dealers and forex investors wishing either to diversify, speculate or to hedge foreign currency risk. The forex market is not a "market" in the traditional sense due to the fact that there is no centralized location for forex trading activity and, therefore, trades placed in the forex market are considered over-the-counter (OTC). Forex trading between parties occurs through computer terminals, exchanges and over telephones at thousands of locations worldwide.

Therefore the forex market is not as efficient as the NYSE for example. Price discrepancies exist between trading platforms, clearing firms, banks, etc if only for a small period of time. Options pricing is also affected for the same reasons but since there are other components involved in pricing an option than just the price of underlying currency, they tend to exist for longer periods of time.

One of the most common causes of option pricing differences is the calculation of volatility. Volatility is generally the standard deviation measured over a period of time. Sounds simple enough right? Well, if compare the volatility measure across different forex option providers, you'll likely find differences as large as 2%. When you find this you have also probably found an arbitrage opportunity.

Now that you've found an arbitrage opportunity, how do you trade it? Well, that's a bit trickier and this article cannot possibly cover all the risks associated with pulling off the trade but I will list some issues you should consider.

First of all, are the options really the same? Are the contract sizes, expiration dates and times the same? American or European style?

You also need to consider execution risk. Will there be slippage. Will there be a time delay in getting filled. Is the market moving too fast?

Exit strategy, how are you going to exit the trade and still capture the profit? What happens if the options expire in-the money? Out-of-the-money? What if you get assigned a position on one option but not the other?

These are just a few of the issues one must consider when trying to profit from option arbitrage. The key to option arbitrage is not unlike any other trade -- planning and risk management. Plan the trade, manage the risks, and execute the plan and you will be successful.

John Nobile,
Senior Account Executive,
CFOS/FX,
http://www.cfosfx.com

Make money at home and give your family the best

It is always pleasant to spend more time with the rest of your family. However, everyone has to earn money too and this is a very essential commodity because it helps you to live the way you want. So look at options to make money at home now.

The sky is the limit to make money at home

There are endless opportunities to make money at home. There are different jobs available which can be done from home, home based businesses and online work which you can do from home. You will have to see what is of interest to you and what you will be able to do without any problems.

The first thing that you will have to think about is whether you know how to go about the work that you have decided to proceed. With the many options that are there to make money at home, you should have no problem in zeroing in on any one of them.

You could either opt to work from home or run a home based business. If you are competent at administrative work and would like to start a home office, you could do this and assist clients with several issues.

A Home Based Business

To run a home based business, it is preferable to set apart a room or a private area where you could work peacefully. It is always easier to concentrate on your work if there is a sort of professional and well maintained atmosphere about it. An airy well lit room will make you more comfortable and help you to go about your work peacefully.

To make money at home through a home based business, you would have to have a client list and also a computer with an internet connection. This basic requirement will be needed for any kind of business that you plan to do.

You could take to marketing and advertising online, ecommerce business, buying and selling, doing online work, doing a travel related business and assist in relocating clients to your city, Other options are medical transcription, web designing, and many other IT solutions with which you could assist your clients and this will get you to make money at home.

Another profitable and interesting business is to manage events and make all the arrangements for such events. This can also be done from your home office. You would need the contacts to source all the things you need for the event and organize it from your home base. The contacts that you would need are caterers, florists, some music providers, photographers, maybe car rental services. If it is for a children's party then you would have to have someone to organize games, magic shows, a clown and other interests that kids have. What would be a big event to organize would be a wedding where you would have to start from the printing of the wedding invitations and help the bride and groom in choosing the dress designers, their accessories, and all that goes in a wedding.

Your telephone book and email contacts are the only paraphernalia that you would have to have on hand, everything else you would have to just delegate to the various service providers.

Well now you have most of your information and all you have to do is to decide on what is you area of interest and expertise to start to make money at home.

Source: Free Articles from ArticlesFactory.com

There is much to do for you and you will have to put it all together with some assistance from a very proficient source. If you need to know more about the opportunities, visit Make Money at Home now.

Download Your AdSense for Search Top Query Data Before Google Deletes It

If you login to your Google AdSense account and go to your AdSense for Search reports, you should see a new warning from Google that they will be deleting AdSense for Search top query data that is older than one year.

The message reads:

Effective December 10, AdSense for Search top query data that's more than a year old will no longer be available. If you have any critical reports, please run and save them prior to December 10.

If you want that data for historical tracking purposes, I would login today and download that data as soon as possible before Google takes it away.

I don't blame Google for deleting it. They can't store data forever. Actually, as I write this, Google is well-known for wanting to store data forever. So why not keep it? They must have some technical reason for wanting to trash old data.

In any event, this is happening on December 10th, so login now and back up that old data.