How To Setup & Use Xenith’s Option Expiry App
Option expiries just got a whole lot more useful with the information in this application.
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We have a question from Dean and Asanka asking how we can setup and use the FX Option Expiry Application inside Metastock Xenith.
Thanks for the question guys, let’s start with the setup, it’s very simple to get it setup because it’s not like the monitors that you need to build from scratch, it’s actually available as one of the tools.
So, in any one of your screens just create a new tab, and after doing that type in the words SDR in your search bar and then press SHIFT ENTER, don’t just press enter, make sure you press SHIFT ENTER to open up more options.
Then on the next screen that opens up the SDR viewer should be the first option from the top, called SDRV SDR View, then select the option.
Then you’ll see there are a few options there such as SDR viewer, weekly volumes and SEF Reports, we actually haven’t even scratched the surface with this application of theirs and is a new discovery for us so for now our application of this is focused on the options and using it as a gauge for buying and selling interest.
So, from the list then, we currently use the third one from the left called the Options Map, and from here you can select any permeation you want like change the currency pair, or change the date range you want to see or change the effective date range and even change the rates ranges you want to see and filter the size of the contracts as well.
If you want to see what type of contract are sitting at each level you can simply just click on these bubbles and they give you a breakdown of the type of orders including whether they are puts or calls, what their size is and when they were opened as a few examples.
So, from a usability point of view, usually when we look at something like option expiry levels, they were very handy because they show us where there is a lot of buying and selling interest on the charts, but we never had access to the data that showed whether that was put or call options, and the difference that makes in using option expiries is quite huge because we can now know when the market will be more inclined to keep price above or below a key option expiry level.
For example, prior to the heatmap, you only knew of very important option expiry levels the day of the expiry, now with this, it gives you a view over a larger timeframe, especially the week, showing you where big players have their contracts sitting.
The biggest breakthrough with using this however is that is shows you what type of orders it is as well as the size, so you can see whether it’s call options or put options and the size of those orders.
So, as you know, a call option is in the money as long as the price is above the expiry price, and a put option is in the money as long as the price is below the expiry price. So, for example, on the EURUSD, we can see there is a whole bunch of option expiries clustered along the 1.1650 area for this week and next, and if you go into the details the majority of the contracts are calls and the size of the calls far outsize the puts, meaning, a lot of contracts will be out of money if price should fall below 1.1650.
Now, does that mean price won’t fall below there, no it simply means that is a zone of interest as it is a key level that your buyers would want to defend and would be an optimal place for long entries in line with the trend. It also means, that below 1.1650 is an area where we can expect key stops to be right now so a break below might see a further move lower quite quickly as stops are hit.
Now, again, this isn’t a magical tool, it’s good for additional analysis, but option expiry levels are just one part of analysis and shouldn’t replace all your other analysis tools, it should just be used to complement your existing analysis and research and help you to gain an additional edge where possible.
Also keep in mind that even though there are billions in option expiries at a particular level, a significant shift in sentiment can easily see the market break through these areas without breaking a sweat at all so use them with caution.
Any other questions guys don’t hesitate to let us know.
-----
If you find this content helpful, you’ll love Forex Source.
There’s a link below were you can learn more about it
https://bit.ly/2HFykNd
----
We interpret and explain price moves in real-time, 24 hours a day. Our team of analysts produce text, video and audio commentary.
You understand the markets and trade with confidence. Learn more at our website here: https://bit.ly/2HFykNd
-----
We have a question from Dean and Asanka asking how we can setup and use the FX Option Expiry Application inside Metastock Xenith.
Thanks for the question guys, let’s start with the setup, it’s very simple to get it setup because it’s not like the monitors that you need to build from scratch, it’s actually available as one of the tools.
So, in any one of your screens just create a new tab, and after doing that type in the words SDR in your search bar and then press SHIFT ENTER, don’t just press enter, make sure you press SHIFT ENTER to open up more options.
Then on the next screen that opens up the SDR viewer should be the first option from the top, called SDRV SDR View, then select the option.
Then you’ll see there are a few options there such as SDR viewer, weekly volumes and SEF Reports, we actually haven’t even scratched the surface with this application of theirs and is a new discovery for us so for now our application of this is focused on the options and using it as a gauge for buying and selling interest.
So, from the list then, we currently use the third one from the left called the Options Map, and from here you can select any permeation you want like change the currency pair, or change the date range you want to see or change the effective date range and even change the rates ranges you want to see and filter the size of the contracts as well.
If you want to see what type of contract are sitting at each level you can simply just click on these bubbles and they give you a breakdown of the type of orders including whether they are puts or calls, what their size is and when they were opened as a few examples.
So, from a usability point of view, usually when we look at something like option expiry levels, they were very handy because they show us where there is a lot of buying and selling interest on the charts, but we never had access to the data that showed whether that was put or call options, and the difference that makes in using option expiries is quite huge because we can now know when the market will be more inclined to keep price above or below a key option expiry level.
For example, prior to the heatmap, you only knew of very important option expiry levels the day of the expiry, now with this, it gives you a view over a larger timeframe, especially the week, showing you where big players have their contracts sitting.
The biggest breakthrough with using this however is that is shows you what type of orders it is as well as the size, so you can see whether it’s call options or put options and the size of those orders.
So, as you know, a call option is in the money as long as the price is above the expiry price, and a put option is in the money as long as the price is below the expiry price. So, for example, on the EURUSD, we can see there is a whole bunch of option expiries clustered along the 1.1650 area for this week and next, and if you go into the details the majority of the contracts are calls and the size of the calls far outsize the puts, meaning, a lot of contracts will be out of money if price should fall below 1.1650.
Now, does that mean price won’t fall below there, no it simply means that is a zone of interest as it is a key level that your buyers would want to defend and would be an optimal place for long entries in line with the trend. It also means, that below 1.1650 is an area where we can expect key stops to be right now so a break below might see a further move lower quite quickly as stops are hit.
Now, again, this isn’t a magical tool, it’s good for additional analysis, but option expiry levels are just one part of analysis and shouldn’t replace all your other analysis tools, it should just be used to complement your existing analysis and research and help you to gain an additional edge where possible.
Also keep in mind that even though there are billions in option expiries at a particular level, a significant shift in sentiment can easily see the market break through these areas without breaking a sweat at all so use them with caution.
Any other questions guys don’t hesitate to let us know.
-----
If you find this content helpful, you’ll love Forex Source.
There’s a link below were you can learn more about it
https://bit.ly/2HFykNd
