Liquidity - Currency Derivatives false, currency

Zesty

True or false, Currency forwards are more liquid than currency futures, which are more liquid than currency options.

If false, state why.

jmh530

What is less liquid, and why is it less liquid?

Unforseen

Futures are more liquid than forwards are more liquid than options

NakedPuts2011

Why are fowards more liquid than options?

Zestt

currency forward dominate the market...

lcai

Interbank currency forwards do more notional volume in one day than the entire market cap of the NYSE. That's serious liquidity. On the other hand, call your broker and tell him you want to do an Interbank trade and he will laugh at you which is really poor liquidity. Go figure.

bodhisattva

JoeyDVivre Wrote:
-------------------------------------------------------
> Interbank currency forwards do more notional
> volume in one day than the entire market cap of
> the NYSE. That's serious liquidity. On the other
> hand, call your broker and tell him you want to do
> an Interbank trade and he will laugh at you which
> is really poor liquidity. Go figure.

I will do as many as you want. 10MM minimum notional with 1.5MM collateral for daily mark to market.

I have seen them for 2-5MM but in that case you are better off using the futures market, because the counterparty bank is going to rip you.



Edited 1 time(s). Last edit at Tuesday, May 24, 2011 at 09:57AM by Paraguay.

PalacioHill

wow i would have totally said futures > forwards and felt confident about it .............thanks guys yet another thing to rererereread

aidebaobao

cookthebooks this is jogging my memory i think thats it

Iginla2011

I thought

futures > options > forwards

OTC forwards dominate the markets, but when I think about liquidity (the ability to sell w/o losing value) I feel like futures are more liquid based on the standardized contract and exchanges they trade on.