3 Feb 2015
Hedging NZD risks ahead of unemployment data – ORE
FXStreet (Barcelona) - Merav Brenner of ORE, shares an options strategy to hedge NZD risks into the unemployment data release.
Key Quotes
“We have seen some action in the sunburnt country with a surprise rate cut to 2.25%, an all time low in Australia.”
“Tonight we have unemployment data to be announced in New Zealand. The currency levels are sensitive at the moment and so it could be a good strategy to hedge your existing portfolio against surprising data, good or bad.”
“If you are currently long the currency, consider an outofthemoney (OTM) Put option as your hedge. Outofthemoney options cost less than atthemoney or inthemoney options as they are further away from the spot and therefor have less of a chance expiring inthemoney and exercised.”
“If you want to be hedged in case of a surprise and assume the market will not move unless such a surprise, OTM options are cheap and have the effect of an insurance in case of a big move.”
Key Quotes
“We have seen some action in the sunburnt country with a surprise rate cut to 2.25%, an all time low in Australia.”
“Tonight we have unemployment data to be announced in New Zealand. The currency levels are sensitive at the moment and so it could be a good strategy to hedge your existing portfolio against surprising data, good or bad.”
“If you are currently long the currency, consider an outofthemoney (OTM) Put option as your hedge. Outofthemoney options cost less than atthemoney or inthemoney options as they are further away from the spot and therefor have less of a chance expiring inthemoney and exercised.”
“If you want to be hedged in case of a surprise and assume the market will not move unless such a surprise, OTM options are cheap and have the effect of an insurance in case of a big move.”