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Tradition-ICAP conducts its business as an independent intermediary in Over the Counter (OTC) FX Options and has offices in London, New York, Frankfurt, Copenhagen, Tokyo, Hong Kong and Singapore. In November 2001, the company integrated the Volbroker system into its currency options business. This created an inter-dealer broking consortium that combines the strengths of voice brokered liquidity together with the market’s leading FX Options electronic broking platform.
Volbroker was the first electronic inter-dealer trading environment for FX Options designed by FX options traders for real-time performance, with liquidity support from the world’s top interbank market makers. There are 30-40 interbank participants publishing FX options pricing on the platform, either directly or through Tradition’s global FXO brokerage desks. Volbroker is the leader for electronic price transparency and efficiency in the USD 5 trillion currency derivatives market.
TraditionData publishes real-time volatility price transparency for ATM (At-The-Money) Straddles, 25 and 10 Delta Risk Reversals and Butterflies in 57 currency pairs.
FX Option Prices, and related market data is sourced from liquidity originating from both voice broker desks and from the leading FX Options electronic broking platform, Volbroker.
Optimised valuation: Data can be used for financial reporting, independent price verification, daily/monthly P&L production and for independent price verification.
Enhanced risk management: The Tradition-ICAP FX Options data packages can be used for stress testing, scenario analysis and also for simulations (historical, intraday or situational).
Precision analysis: Data can be used for trading, research, portfolio management and asset allocation.
FX Options are derivatives based on underlying currency pairs. Trading FX Options involves a wide variety of strategies available for use in FX markets, where foreign currencies are traded. The strategy a trader may employ depends largely on the kind of option they choose and the broker or platform through which it is offered.
The characteristics of currency options trading include a decentralized FX market that varies much more widely than options in the more centralized exchanges of stock and futures markets.
Options traded in the FX marketplace differ from those in other markets in that they allow traders to trade without taking actual delivery of the asset. FX options trade over-the-counter (OTC), and traders can choose prices and expiration dates which suit their hedging or profit strategy needs. Unlike futures, where the trader must fulfil the terms of the contract, options traders do not have that obligation at expiration.