CME Group Brings FX Options Volatility Converter Tool

CME Group, a major United States-based derivatives market operator, announced on Monday the launch of a new FX Options Volatility Converter tool that will allow market participants to price the exchange-listed FX options Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term in over-the-counter (OTC) terms.

The new tool extracts the extensive market price data from the exchange’s central limit order book that is already functionally equivalent to OTC options and then creates a volatility grid by tenor and deltas for comparison purposes.

“Our new FX Options Vol Converter calculates and converts our listed FX options premiums, fixed strike data, rules, and formats into an OTC-equivalent volatility surface, in OTC standard tenors, deltas, and quote conventions – creating comparable pricing across major options pairs,” Paul Houston, managing director and global head of FX products at CME Group, explained.

Easing the Traders' Decision-Making Process

The market operator has brought this tool when the market participants are actively looking for efficient ways to lower their trade costs.

This, according to CME, will allow the Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term traders to efficiently monitor price relationships and help them to make informed market decisions and execute the best trading strategies.

“Traders can quickly act upon a market opportunity with a drill-down showing the product code, reference premium price, volatility, delta, and futures value to help identify their trading opportunity,” Houston added.

Finance Magnates recently reported on a year-on-year decline in forex volumes on CME for the month of August. However, metals trading on the exchange broke records. It also reopened its Eurodollar options trading pit last month that was closed earlier, due to the Coronavirus pandemic.