Foreign exchange (FX) option expiries for the 23rd of March at 10:00 Eastern Time have been released by the Depository Trust & Clearing Corporation (DTCC) and are shown below. These figures represent the potential impact that options trades may have on FX spot rates as they near expiration.
EUR/USD Option Expiries:
• 1.0650-52: EUR 848 million
• 1.0800: EUR 874 million
• 1.0890-05: EUR 553 million
• 1.0920-25: EUR 541 million
USD/JPY Option Expiries:
• 130.00: USD 574 million
• 130.37-55: USD 1.3 billion
• 131.00: USD 631 million
• 131.50: USD 1.5 billion
• 132.00: USD 827 million
AUD/USD Option Expiries:
• No amounts reported
EUR/GBP Option Expiries:
• No amounts reported
USD/CNY Option Expiries:
• No amounts reported
A closer look at the above numbers can offer insight into market sentiment and trade opportunities. Large option expiries can influence the underlying spot price, as traders may want to hedge their positions in anticipation of these large trades. However, it is important to remember that option expiries do not always translate into actual trades, and sometimes these trades can be executed elsewhere. Nonetheless, the figures provide a useful snapshot of the market’s expectations.
EUR/USD: Focus on 1.08 Level
Looking at EUR/USD, the largest option expiry of EUR 874 million is at the 1.0800 strike, which may act as a magnet for price action. This means that the spot price may be drawn towards the strike price to trigger the option before the expiry, so traders should be on the lookout for potential price action to occur at this strike price.
The EUR/USD pair is experiencing major selling pressure due to the growing Coronavirus concerns that have shaken both the European Union and the United States. Additionally, the bearish economic mood is putting pressure on the Euro as it deals with the faltering German ZEW Economic Sentiment Survey (survey of institutional investors and analysts, which measures their six months economic Sentiment outlook on the Eurozone and Germany) as well as last week’s dovish statement from the European Central Bank (ECB).
USD/JPY: Option Expries Cluster Together
The USD/JPY pair has a cluster of option expiries, with the largest being USD 1.3 billion at the 130.37-55 strike price. This significant level has been the subject of significant price range trading in recent weeks. While the yen is known for its safe-haven status, the current crisis has seen it attract significant selling pressure, driving the pair to test its support level. The pair has a significant resistance at 110.37, with stronger resistance at 110.55, which could be difficult to break if the current market sentiment persists.
AUD/USD, EUR/GBP, and USD/CNY: No Major Option Expiries
There are no significant option expiries for AUD/USD, EUR/GBP, and USD/CNY at present. These three pairs remain broadly affected by geopolitical tensions and global market sentiment. Prices will be heavily influenced by the continued progression of the Covid-19 pandemic and their respective country’s economic releases.
Over recent weeks, the AUD/USD has been under strong selling pressure due to the continued spread of Covid-19 globally and the continued slide in global commodity prices. Additionally, last week’s dovish monetary policy from the Reserve Bank of Australia(RBA) did nothing to support the Aussie. On the other hand, the EUR/GBP is still affected by the ongoing Brexit negotiations, leaving investors to watch how the United Kingdom exits the European Union (EU). The USD/CNY remains under pressure from any adverse trade war news and China’s ongoing response to the coronavirus outbreak.
In conclusion, the option expiries for March 23 are expected to move the market and offer varying opportunities for traders. The largest option strike prices will likely be key levels to watch out for in the coming trading sessions. However, it is important to remember that markets are volatile and can quickly change direction, so it is essential to keep an eye on economic data, geopolitical events, and other indicators. Additionally, having a robust risk management plan and implementing sensible trading strategies is paramount to successful trading in the FX market.
