As if by magic, after both Ryan and I mentioned these option contracts in our course presentations this week.
There haven't been a lot of Double No Touch (DNT) option plays of note recently but with Grexit looming next week it's understandable that the interest has returned
Learning from sources that players are looking at EURUSD DNT's with ranges 1.0725/1.1675, 1.0750-1.1700,and 1.0850/1.2000 all being asked/priced up yesterday in the options market effective from Wednesday, the day after the 30 June Greek deadline
For those unfamiliar a DNT is an option that gives the trader an agreed-upon payout if the price of the currency pair does not reach or surpass one of two predetermined barrier levels. The traders pays a premium and in turn receives the right to choose the position of the barriers, the time to expiration, and the payout to be received if the price fails to breach either barrier. With this type of option, the maximum possible loss is just the cost of setting up the option
Once either side (barrier) is hit then the option ceases and the writer wins.
The giant Panda, aka Peoples Bank of China, have been notable users of these contacts over the years and given the size of them, and the contract, will defend a level rigorously.
Note the levels for future reference
Not sure of size of these but the volatility market has been somewhat dampened as a result
Update: Looks like they may be 3 month contracts