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Take your Options Trading to the next higher level by trading with the pros at the Live Trading Labs. Watch the interview of the Champion who won the 0,000 cash prize in the Forex Robot World Cup. Win your FREE COPY of the High Velocity Market Master System (,997) by taking this quiz. Don't forget to get your FREE copies of the Ultimate Day Trading System that can trade stocks, forex and futures and the Universal Capital Growth Trade Tool!Many currency traders don't know much about options. Currency options are a highly profitable method to make money from a trend in the currency market. Many traders simply focus on spot trading. If you combine spot trading with currency options, you can multiply your portfolio return many folds. There are some currencies that are popularly known as commodity currencies. You can trade these currencies with commodities using options!

Let's take a practical example. Many people go to South Africa to enjoy its pristine beauty as well as its beautiful beaches. If you are a currency trader or a trader trading different markets, you will definately enjoy the beautiful beaches with your friend but you will also like to know more about its currency RAND. You will also be knowning that South Africa is the largest exporter of gold and its currency RAND is highly correlated with gold prices in the world market.Now, this correlation has a historical spread. Most of the time both RAND and gold prices will be following this spread but sometimes, if you are a keen observer, you might find that spread to be out of sync with the historical relationship and is unusually wide. You can profit from this opportunity by taking out and call position in gold as well as RAND with the hope that the spread will return to its historical average!

Now, Australian Dollar (AUD) also has a strong correlation with gold prices as Australia is also a major exporter of gold in the world markets. Now AUD is one of the commodity currencies that you can trade with Reuters Commodity Index if you find the spread getting wider than the historical relationship.

Ever thought of carry trading. Many trader do it. You too can try it. Hedge funds are the expert in carry trading. One of their popular trading strategies is carry trading. You see noone want the money to sit idle without making any return. Carry trading is a nice way to profit with the interest rate spread between two currencies. You look for a currency pair that has one currency offering a much higher interest rate as compared to the other. You buy the high interest rate currency and sell the low interest rate currency.

In the last decade, Japanese economy was facing stagflation. This forced the Japanese Central Bank (JCB) to lower the interest rate to almost zero. So carry traders started selling Japanese Yen (JPY) and buying other high yield currencies like British Pound (GBP) or the New Zealand Dollar (NZD) that were offering a much higher interest rate. Now, carry trading like any other currency trading strategy is risky. The risk is of a sudden large drawdown when the risk aversion of the carry traders increases all of a sudden on hearing a breaking news.By taking put and call positions in the two currencies, you can hedge the risk of a large drawdown.

One of the popular carry trading pair was GBPJPY. Many traders have encountered large drawdowns by selling JPY and buying GBP. As a trader, you can reduce that risk by trading put and calls on these two currencies by using spread analysis on their historical correlations.

Tags: carry trading, currency options, currency options strategies, currency options strategy, currency options trading, options trading, options trading strategies, options trading strategy, spread trading