FxWirePro

USD/CHF valuations seems tighter at 1.0032, speculating chances

FX:USDCHF   U.S. Dollar/Swiss Franc
67 0 5
The pair could not hold onto major resistances at 1.0093 and 1.0032 levels.

On the flips side, it was neither ready to give up below 7DMA.

On monthly terms, although dollar showing much volatility against Swiss franc             from last couple of months or so, it has remained well within the range of 1.0319 on north and 0.9850 on south.

A beautiful tug of war between bulls and bears as the pair has been able to bounce back to resistance 1.0032 mark but rejected back channel resistance at that juncture. Currently, USDCHF             FX options of 1W expiries are showing huge implied volatilities almost upto 16% with negative risk reversals (see below link for IVs).

Daily oscillators are absolutely puzzling with indecision but the same on monthly are hinting slightly bearish bias.

Contemplating on technicals, IVs and risk reversals we USDCHF             to continue to go in narrow range creating opportunities of speculation in short term by selling high yield IVs, but likely to remain bearish bias in long run.

Thus, smart approach USDCHF             is that to deal with this higher implied volatility times and shrinkage, we eye on collecting credits or short for premiums, and hope for a contraction in volatility which OTC             market has already signalling.

On speculative basis short strangles are the best suitable in prevailing condition of USDCHF             , hence, we recommend shorting 1W (1%) OTM puts as well as 1W (1%) OTM calls for a net credit.

The strategy not only gives you the advantage of an anticipated volatility crush, but also give us some room to be wrong because we may short premium narrowing strikes while in greed of collecting more credit than when IV is low.

Please refer below link for IVs:

http://www.econotimes.com/FxWirePro-USD-CHF-IVs-no-exception-from-rising-ahead-of-SNBs-policy-season-trend-narrowing-short-HY-IVs-via-OTM-strangles-176465
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