PriNova,
I fully understand what are you explainig but is not easy as you have written.
"The box" is just a different way to play with with option or derivatives. When you made some transaction (because this is not a trade) you're purchasing by buying or selling a call or pu or some exotics.
To do this relatively safety you need to know at least something about delta and gamma.
FXBox Options - OANDA FXTrade
Quote:
FXBoxOption - Exotic Options Made Simple
The OANDA FXTrade platform includes a form of options trading called FXBoxOption. This feature lets OANDA clients trade options through a simple, well-understood graphical user interface. Now the everyday trader can buy and sell a complex structured options product that used to be available only to the sophisticated institutional investor.
The OANDA FXBoxOption feature empowers traders to define their own options in real-time:- Option strategies enable the trader to cap the risk (unlike margin-based trading, where the trader has to take potentially unlimited risk to participate on the upside). The ability to carefully control risk makes intra-day options trading attractive to short-term traders.
- FXBoxOptions can be used to trade intra-day options with time horizons as short as 5 minutes (Unlike traditional options, which are typically only available for time horizons of one or more days).
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Trading with exotics is interesting and lucrative but the money management is completely different than normal trading. Every time you purchase an option
you have to pay to the broker some fee that is calculated on many things like volatility and expiration.
Example: if the expiration is closely to the price, letīs say one hour, you have to pay more than if the expiration is next week. Sometimes the RR makes no sense to purchase the exotic becuase to win 1000 you have to pay 800.
From OANDA website:
Quote:
- BoxOptions provide higher potential investment leverage: a box costing $1 can quite typically correspond to a position in the underlying of about $1,000. Trading the underlying would therefore require significantly more capital for the same return.
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Maybe to buy something for 1$ the expiration is one year.
Exotics, options and others are very interesting as hedge or risk control.
I was very busy in the 90īs working with this and commodities.
Farmers wants to sell their crop at best price, we advices to not sell when everybody was harvesting (OTC) and we made farmers to "sell" by "buying a futures contact" hedging with a call.