Hedging short AUDUSD position with AUM/AUX options

[derenik]

Is anyone good at fx options? I have a -30K position in AUDUSD which is now a bit underwater and I'm considering buying AUM calls or AUX puts. What I don't understand is all those multipliers and how many options I need to buy. Is it true that -30K position is 300 AUM index contracts? And as the options multiplier is 100 then 1 option is actually has 10K exposure and I need 3 options to have the same exposure as my FX position?
Thanks!

 

[derenik]

Ok, I've got a good link about this. It seems that I need 3 options.
If someone has any comments or would like to share their experience in fx hedging - I'd love to hear from you.
Thanks!

http://content.tradeking.com/wiki/download/attachments/1924/2010-06-01+TK+FX+desk.pdf

 

[skc]

I know nothing about FX options...But based on what's you've posted - neither do you.

I would sincerely suggest you have a good think before you act on the hedge. Just stick to your plan (if you had one) rather than change things half way through using an instrument that you know nothing about.

Good luck.

 

[skyQuake]

Just close the position. Easy.

Hedging with an instrument you don't understand will be costly.

Also AUD fx oppies are fairly pricey imo in terms of prem; and transaction costs

 

[derenik]

I'm a long term seller and I don't want to realize my losses now. All I want to do is just place a short term cap on the losses. I guess investing $100 in protection with options is ok when you are going after $2000-3000. I trade equity options so I know options but not familiar with fx options particularly.

skyQuake, I'm looking at Jan 104 AUM calls and they are ~0.25 for 1.0171 (ISE is closed now so the price is stale and 0.25 should be the price for 103 call as for now). So it's $75+commission. I guess commission will be somewhere around $3 per option.

I'm not sure that this is the best plan myself and this is the reason I'm here