Chapter 3.4. Forex Options

Transcription

1 Chapter 3.4 Forex Options 0

2 Contents FOREX OPTIONS Forex options are the next frontier in forex trading. Forex options give you just what their name suggests: options in your forex trading. If you have been looking for a way to add unparalleled flexibility to your trading, you have come to right place. Norne Securities has the most comprehensive forex option trading platform in the industry. Come see what you have been missing by simply buying and selling currency pairs. Forex options allow you to not only take advantage of movement in a currency pair but also limit the risk you expose your account to. You can make money with options when currency pairs are moving higher, when currency pairs are moving lower and even when currency pairs are moving sideways. In this options section, we will explain the following to get you ready to place your first option trade: What vanilla options you can trade calls and puts What affects option values option Greeks What type of option trader you will be buyer or seller We will begin with standard options in this section to lay a solid foundation to get you started in your option trading. Standard options are also called vanilla options because they are plain and simple they don t have a lot of extra frills. In subsequent sections, we will discuss exotic options options with extra frills that you can apply in unique situations. 1

3 VANILLA OPTIONS CALLS AND PUTS Vanilla options come in two varieties: calls and puts. Call options give you the right, but not the obligation, to buy a currency pair at a certain price on or before a certain date. Put options give you the right, but not the obligation, to sell a currency pair at a certain price on or before a certain date. You have the ability to both buy and sell call and put options. If you believe a currency pair is going to move higher, you can either buy a call option or sell a put option to take advantage of the upward movement of the currency pair. If you believe a currency pair is going to move lower, you can either buy a put option or sell a call option to take advantage of the downward movement of the currency pair. You will learn more about what you can do with options later in this section when we discuss what type of an option trader you will be. Right now it is important for you to learn the basics of what options are and how they work so you can use them appropriately in your forex trading. Take a moment to become familiar with the following: OPTION CHARACTERISTICS Forex options are unique, multi-dimensional trading tools. They give you tremendous flexibility in your investing. If you want to successfully use them in your own portfolio, however, you need to become familiar with their distinctive traits. Every vanilla option has the following three characteristics: Strike price: this is the price at which you can buy a currency pair (if you have bought a call option or sold a put option) or you can sell a currency pair (if you have bought a put option or sold a call option). Expiry date: this is the date on which the option expires, or becomes worthless, if nobody exercises it. Premium: this is the price you pay when you buy an option and the price you receive when you sell an option. - Unique characteristics of forex options - Value of a forex option 2

4 For example, you can buy a call option on the EUR/USD with a strike price of and an expiry date of December 21 by paying a premium of $1,800. By doing so, you have paid $1,800 for the right to buy the EUR/USD currency pair at at any time before December 21. THE VALUE OF AN OPTION The value of an option has two elements: intrinsic value and time value. Hence, an option on an asset which is more likely to take on extreme values is much more valuable than on a less volatile asset. Interest rates differentials in the two currencies involved in a currency option trade must also be taken into consideration when pricing an option, and these are also a function of time. This graph depicts how a call option is priced according to how close the asset price is to the strike price for the option. Intrinsic value market convention is to refer to the price of the underlying asset minus the strike of the option as the option's intrinsic value (for a Call option, for a Put it is just the opposite). Theoretically, one could argue that the forward rate of the underlying asset should be used instead of its spot, but market convention is to use the spot. Time value simply put, an option's time value is the amount by which the value of the option exceeds the intrinsic value. The volatility of the underlying asset has a significant bearing on the time value. Time value increases as volatility increases because of the Profit/Loss scenario for an option. As previously mentioned, the potential upside for an option holder is unlimited, while the downside is limited to the premium paid. 3

5 Let's say that you hold a Call option with a strike price, and that the market price of EUR/USD has risen to Your option is worth 225 pips thirty days before the option's expiration date. The intrinsic value is the difference between the strike price for the underlying asset in the option contract (1.2000) and the market price (1.2155). If you hold a call option, which gives you the right to buy EUR/USD at and the market price is the intrinsic value of the option is 155 pips. So the price of the option is the intrinsic value plus the time value (in this case 70 pips). OPTION GREEKS Option prices are affected by five factors, each of which has a fun Greek name to represent it. As you progress as a forex option trader, you will see the following options Greeks on a regular basis: - Delta - Gamma - Theta - Vega - Rho 4

6 Delta describes how the value of an option changes as a result of small changes in the underlying asset, assuming that all the other factors influencing option pricing are constant. The delta of an option can also be viewed as the required hedge for the option against changes in the underlying spot, i.e. the position in the spot which ensures that the Profit/Loss on the option is offset by the Profit/Loss on the spot position. For each options position, the table below indicates the direction, i.e. whether to buy or sell, of the hedge position in the spot. Gamma describes how the delta of the option changes when the underlying asset changes. Hence, the gamma also describes how you should change your hedge to remain delta neutral when the spot moves. All purchased standard options, calls and puts, have positive gamma. The gamma position also provides insight into the investor's view on the volatility of the underlying asset, as a long position shows expectations of a volatile market while a short position indicates that he/she expects a calm market. Theta describes the change in the value of the option when time passes and everything else remains constant. This change stems from the fact that the time to an option's expiration is reduced with the passage of time. This change in value is also commonly referred to as how much the option 'bleeds' the speculator. The theta (sensitivity) is often noted in pips lost in value per day that passes. Vega describes the change in the value of the option when the volatility changes. The volatility represents how large the swings are in the underlying asset and is the cornerstone in option pricing. Larger swings imply that the underlying asset is more likely to take on more extreme values. While the option holder's risk is limited to the premium, his/her upside is unlimited for vanilla options. Hence, an increase in the volatility of the underlying asset increases the value of the option. As the table below suggests, the sensitivity is larger the closer to At-The Money (ATM)* the option is and the longer it has until it expires. Rho describes the sensitivity of the option price, based on the Black- Scholes model, with regards to changes in the interest rate. Hence, the Rho does not include the impact that a change in the interest rate has on the exchange rate. For foreign exchange options, their values depend on 5

7 both the interest rate on the base currency (which is the euro for the EUR/USD) and the interest rate on the reference currency (which is the dollar for the EUR/USD). *At-the-money means that the strike price is the same as the current price of the currency pair when you enter the trade. OPTION BUYERS AND OPTION SELLERS Forex option traders can be either option buyers or option sellers. Option buyers are those traders who enter a trade by buying either a call or a put option. Option sellers are those traders who enter a trade by selling either a call or a put option. Your decision to buy an option contract or to sell an option contract will be based on whether you are bullish or bearish on a currency pair. Up if your fundamental and technical analysis tells you that the currency pair is going to be moving up, you can either buy a call option or sell a put option. Down if your fundamental and technical analysis tells you that the currency pair is going to be moving down, you can either buy a put option or sell a call option. Sideways if your fundamental and technical analysis tells you that the currency pair is going to be moving sideways, you can either sell a call option or sell a put option. Call Put Up Buy Sell Down Sell Buy Sideways Sell Sell You can make money with forex options whether currency pairs are going up, down or sideways. 6

8 Buying a call or a put option allows you to take advantage of virtually unlimited profits so long as the currency pair continues moving higher if you bought a call option or lower if you bought a put option. However, the currency pair does have to move far enough to overcome the initial premium you paid for the option. Selling a call or a put option allows you to collect your profits up front and keep the full profit so long as the currency pair remains below the strike price of the call you have sold or above the strike price of the put you have sold. However, if the currency pair does move past your strike price, you can lose more money that you collected by selling the option. - Buying a call option - Buying a put option - Selling a call option - Selling a put option Let s take a look at how each of the following option trades reacts in various market conditions (assuming you buy or sell ATM options): Before you look at how these option trades will react, however, you need to acquaint yourself with the tool we will be using to illustrate the affect various market conditions will have on your option trades: a risk graph. 7

9 BUYING A CALL OPTION Buying a call option, or going long the call option, is a bullish option trade which means you want the underlying currency pair to go up in value. If the currency pair goes up, you will maximize your profits on your call trade. Unfortunately currency pairs don t always do what you want them to do in the forex market, and you need to know what will happen to your call option in various scenarios. A currency pair can do one of the following five things: - Go up a lot - Go up a little - Remain flat - Go down a little - Go down a lot 8

10 Up a Lot when you have bought a call and the currency pair moves up a lot, you maximize your profits on the trade. Every pip higher the currency pair moves above the breakeven point for the call option makes you more money. You can see how the blue profit/loss line continues to rise after it crosses the breakeven point. 9

11 Up a Little when you have bought a call and the currency pair moves up a little, you minimize your losses on the trade. Every pip higher the currency pair moves above the strike price for the call option reduces your losses. You can see how the blue profit/loss line starts to rise after it crosses the strike price level but that it is still below breakeven. 10

12 Flat when you have bought a call and the currency pair remains flat, you reach the maximum loss on the trade. When you buy a call option, you must pay the premium up front. If the currency pair remains flat, you lose the entire premium (your maximum loss). You can see how the blue profit/loss line reaches its lowest level at the strike price. 11

13 Down a little when you have bought a call and the currency pair goes down a little, you reach the maximum loss on the trade. When you buy a call option, you must pay the premium up front. If the currency pair goes down a little, you lose the entire premium (your maximum loss). You can see how the blue profit/loss line remains flat at its lowest level below the strike price. 12

14 Down a lot when you have bought a call and the currency pair goes down a lot, you reach the maximum loss on the trade. When you buy a call option, you must pay the premium up front. If the currency pair goes down a lot, you lose the entire premium (your maximum loss). You can see how the blue profit/loss line remains flat at its lowest level below the strike price. 13

15 In review, here are the results you can expect from different price action when you buy a call option. PRICE ACTION Up a Lot Up a Little Flat Down a Little Down a Lot RESULT Maximize Gains Minimize Losses Achieve Maximum Loss Achieve Maximum Loss Achieve Maximum Loss BUYING A PUT OPTION Buying a put option, or going long the put option, is a bearish option trade which means you want the underlying currency pair to go down in value. If the currency pair goes down, you will maximize your profits on your put trade. Unfortunately currency pairs don t always do what you want them to do in the forex market, and you need to know what will happen to your put option in various scenarios. A currency pair can do one of the following five things: Go up a lot Go up a little Remain flat Go down a little Go down a lot 14

16 Up a Lot when you have bought a put and the currency pair moves up a lot, you reach the maximum loss on the trade. When you buy a put option, you must pay the premium up front. If the currency pair goes up a lot, you lose the entire premium (your maximum loss). You can see how the blue profit/loss line remains flat at its lowest level above the strike price. 15

17 Up a Little when you have bought a put and the currency pair moves up a little, you reach the maximum loss on the trade. When you buy a put option, you must pay the premium up front. If the currency pair goes up a little, you lose the entire premium (your maximum loss). You can see how the blue profit/loss line remains flat at its lowest level below the strike price. 16

18 Flat when you have bought a put and the currency pair remains flat, you reach the maximum loss on the trade. When you buy a put option, you must pay the premium up front. If the currency pair remains flat, you lose the entire premium (your maximum loss). You can see how the blue profit/loss line reaches its lowest level at the strike price. 17

19 Down a little when you have bought a put and the currency pair goes down a little, you minimize your losses on the trade. Every pip lower the currency pair moves below the strike price for the put option reduces your losses. You can see how the blue profit/loss line starts to rise after it crosses below the strike price level but that it is still below breakeven. 18

20 Down a lot when you have bought a put and the currency pair goes down a lot, you maximize your profits on the trade. Every pip lower the currency pair moves below the breakeven point for the put option makes you more money. You can see how the blue profit/loss line continues to rise after it crosses below the breakeven point. 19

21 In review, here are the results you can expect from different price action when you buy a put option. PRICE ACTION Up a Lot Up a Little Flat Down a Little Down a Lot RESULT Achieve Maximum Loss Achieve Maximum Loss Achieve Maximum Loss Minimize Losses Maximize Gains SELLING A CALL OPTION Selling a call option, or going short the call option, is a bearish option trade which means you want the underlying currency pair to go down in value. If the currency pair goes down, you will maximize your profits on your call trade. Unfortunately currency pairs don t always do what you want them to do in the forex market, and you need to know what will happen to your call option in various scenarios. A currency pair can do one of the following five things: Go up a lot Go up a little Remain flat Go down a little Go down a lot 20

22 Up a Lot when you have sold a call and the currency pair moves up a lot, you maximize your losses on the trade. Every pip higher the currency pair moves above the breakeven point for the call option costs you more money. You can see how the blue profit/loss line continues to fall after it crosses the breakeven point. 21

23 Up a Little when you have sold a call and the currency pair moves up a little, you minimize your gains on the trade. Every pip higher the currency pair moves above the strike price for the call option reduces your gains. You can see how the blue profit/loss line starts to fall after it crosses the strike price level but that it is still above breakeven. 22

24 Flat when you have sold a call and the currency pair remains flat, you reach the maximum gain on the trade. When you sell a call option, you receive the premium up front. If the currency pair remains flat, you get to keep the entire premium (your maximum gain). You can see how the blue profit/loss line reaches its highest level at the strike price. 23

25 Down a little when you have sold a call and the currency pair goes down a little, you reach the maximum gain on the trade. When you sell a call option, you receive the premium up front. If the currency pair goes down a little, you get to keep the entire premium (your maximum gain). You can see how the blue profit/loss line remains flat at its highest level below the strike price. 24

26 Down a lot when you have sold a call and the currency pair goes down a lot, you reach the maximum gain on the trade. When you sell a call option, you receive the premium up front. If the currency pair goes down a lot, you get to keep the entire premium (your maximum gain). You can see how the blue profit/loss line remains flat at its highest level below the strike price. 25

27 In review, here are the results you can expect from different price action when you buy a call option. PRICE ACTION Up a Lot Up a Little Flat Down a Little Down a Lot RESULT Maximize Losses Minimize Losses Achieve Maximum Gain Achieve Maximum Gain Achieve Maximum Gain SELLING A PUT OPTION Selling a put option, or going short the put option, is a bullish option trade which means you want the underlying currency pair to go down up value. If the currency pair goes up, you will maximize your profits on your put trade. Unfortunately currency pairs don t always do what you want them to do in the forex market, and you need to know what will happen to your call option in various scenarios. A currency pair can do one of the following five things: Go up a lot Go up a little Remain flat Go down a little Go down a lot 26

28 Up a Lot when you have sold a put and the currency pair moves up a lot, you reach the maximum gain on the trade. When you sell a put option, you receive the premium up front. If the currency pair goes up a lot, you get to keep the entire premium (your maximum gain). You can see how the blue profit/loss line remains flat at its highest level above the strike price. 27

29 Up a Little when you have sold a put and the currency pair moves up a little, you reach the maximum gain on the trade. When you sell a put option, you receive the premium up front. If the currency pair goes up a little, you get to keep the entire premium (your maximum gain). You can see how the blue profit/loss line remains flat at its highest level above the strike price. 28

30 Flat when you have sold a put and the currency pair remains flat, you reach the maximum gain on the trade. When you sell a put option, you receive the premium up front. If the currency pair remains flat, you get to keep the entire premium (your maximum gain). You can see how the blue profit/loss line reaches its highest level at the strike price. 29

31 Down a little when you have sold a put and the currency pair goes down a little, you minimize your gains on the trade. Every pip lower the currency pair moves below the strike price for the put option reduces your gains. You can see how the blue profit/loss line starts to fall after it crosses the strike price level but that it is still above breakeven. 30

32 Down a lot when you have sold a put and the currency pair goes down a lot, you maximize your losses on the trade. Every pip lower the currency pair moves below the breakeven point for the put option costs you more money. You can see how the blue profit/loss line continues to fall after it crosses the breakeven point. 31

33 In review, here are the results you can expect from different price action when you buy a call option. PRICE ACTION Up a Lot Up a Little Flat Down a Little Down a Lot RESULT Achieve Maximum Gain Achieve Maximum Gain Achieve Maximum Gain Minimize Losses Maximize Losses READING A RISK GRAPH Risk graphs are a simple tool you can use to visualize what the result of your option trade will be in various market situations. Risk graphs illustrate what the result of your option trade will be if the currency pair does any of the following: Go up a lot Go up a little Remain flat Go down a little Go down a lot As you look at a risk graph, you will see the following components (we will use a risk graph for a long call to illustrate): 32

34 Profit/Loss axis the vertical axis on the left of the chart that shows the profit/loss you will receive. For example, Point C shows a profit along the profit/loss axis, while Point D shows a loss along the profit/loss axis. Currency price axis the horizontal axis that runs through the middle of the chart represents the price of the currency pair. Prices run lower to higher from left to right. For example, Point C is at a higher price than Point D. Profit/Loss line the blue line that runs through the chart shows the profit/loss you will receive at any given price along the chart. For example, Point C shows you will receive a profit when the currency pair is at a higher price, while Point D shows you will receive a loss when the currency pair is at a lower price. Strike price the price at which the option holder can exercise an option. The strike price is represented by Point A on the chart. Remember, calls become profitable above the strike price while puts become profitable below the strike price. Breakeven point the point at which you neither make money nor lose money on your option trade. The breakeven point is represented by Point B on the chart. Remember, the breakeven point for calls is always above the strike price while the breakeven point for puts is always below the strike price. 33

35 Contents TRADING USING MULTIPLE TIME FRAMES Traders of virtually every monetary size and temperament trade the Forex market. At any given time, short-term scalpers and long-term fundamental traders are looking at the same currency pairs and are trying to determine how to place or adjust their trades. However, while they may be looking at the same currency pairs, they are not looking at the same chart time frames. Short-term traders are most likely looking at 1-minute to 15-minuted currency charts, while long-term traders are most likely looking at daily to monthly charts. Successful Forex traders trade with a bias toward the long-term trend. It has had a longer time to establish itself, and it will take a large surge of momentum to change its direction. Of course, if you see the fundamentals changing for a currency or a news announcement affecting a currency, you can trade against the long-term trend if you take precautions. You should always be aware of trends and levels of support and resistance across multiple time frames. This enables you to identify how strong various trends and levels of support and resistance are. Using multiple time frames on your charts helps you expand your technical analysis. Trends, support and resistance lines and technical indicators look much different on a 1-minute chart than they do on a daily chart. For example, you may look at a 1-minute chart of the EUR/USD and see that the pair appears to be in a down trend. If you switch your chart to a daily chart, however, you may see that the currency pair has been in an uptrend for years. So which chart is right? Is the EUR/USD in an uptrend or is it in a down trend? Trend chart (Longer-term chart) Signal chart (Chart you typically use) Timing chart (Shorter-term chart) 34

36 You should be analysing the following three charts (time frames) in your technical analysis: Once you have analysed each time frame, you can put them all together to confirm a high-probability trading set up. TREND CHART The trend chart, as the name suggests, helps you identify the predominant trend you should be looking to trade with. If the currency pair in the trend chart is trending upward, you should be looking to buy the currency pair. If the currency pair in the trend chart is trending downward, you should be looking to sell the currency pair. To identify the time frame you should be using for your trend chart, you first need to identify the time frame you typically use on your trading (signal) charts. Once you have identified the time frame of your signal chart, you should go up one time frame to find the time frame you should be using on your trend chart. - 1-minute signal chart = 15- to 30-minute trend chart - 5-minute signal chart = 1-hour trend chart to 30-minute signal chart = 4-hour trend chart - 1-hour signal chart = 1-day trend chart - 1-day signal chart = 1-week trend chart - 1-week signal chart = 1-month trend chart For example, if you typically trade the EUR/USD looking at a 1-hour chart, you should use a 1-day chart for your trend chart. If you typically trade the EUR/USD looking at a 15-minute chart, you should use a 4-hour chart for your trend chart. The following is a list of common signal-chart time frames you can use to identify the appropriate time frame for your trend chart: 35

37 Once you have identified the time frame you should be using for your trend chart, all you need to do is determine what the prevailing trend on the chart is. You can use diagonal support and resistance levels or moving averages to identify the trend. You can see on the weekly EUR/USD here that both the diagonal support level and the moving average indicate that this currency pair is in an uptrend. 36

38 If there is an uptrend on your trend chart, you should be looking for buy signals on your signal chart. If there is a down trend on your trend chart, you should be looking for sell signals on your signal chart. Once you have identified the trend, you now need to identify profitable trading signals. SIGNAL CHART The signal chart is your most important chart. It provides the trading signals that tell you when to look for buying and selling opportunities based on the trading methodology you use. For instance, if you typically use the commodity channel index (CCI) to help you identify trading signals, you will use the signal chart here. You won t use the indicator on the trend chart or the timing chart. 37

39 Using a signal chart in conjunction with a trend chart enables you to more accurately identify potentially profitable trade signals. For example, if your trend chart shows the currency pair is in an upward trend, you should only be looking for buy signals on your signal chart. The best way to take advantage of a longer-term up trend is to buy the currency pair. If your trend chart shows the currency pair is in a down trend, you should only be looking for sell signals on your signal chart. The best way to take advantage of a longer-term down trend is to sell the currency pair. In effect, the trend chart allows you to ignore the less-profitable half of the trading signals you see on your signal chart. Since these trading signals are going against the longer-term trend, they will most likely be unsuccessful. Now that you have identified your trading signals, you need to determine exactly when to enter and exit your trades using your timing chart. TIMING CHART The timing chart, as the name suggests, helps you time exactly when you should enter and exit a trade. Every pip counts when you are a Forex trader so the more accurately you can identify your entry and exit points, the more money you keep in your account. The following is a list of common signal-chart time frames you can use to identify the appropriate time frame for your timing chart: - 1-minute signal chart = Tick timing chart - 5-minute signal chart = 1-minute timing chart to 30-minute signal chart = 5-minute timing chart - 1-hour signal chart = 15-minute timing chart - 1-day signal chart = 1-hour timing chart - 1-week signal chart = 1-day timing chart - 1-month signal chart = 1-week timing chart 38

40 You can use one of the following two methods when pinpointing your entry and exit signals on your timing charts: 1. You can identify the trend and support and resistance levels 2. You can use the same technical indicator you use to generate your trading signals For example, if you did use the CCI on your signal chart and it gave you a buy signal, you would add the CCI to your timing chart and make sure it was giving you a buy signal on the timing chart as well. If the CCI is not giving a buy signal on the timing chart, you should wait until it gives a buy signal on the timing chart before you enter the trade. Identify trend and support and resistance if you see a buy signal on your signal chart, you want to see the currency pair in an uptrend on the timing chart. You also want to see that the currency pair price is closer to support than it is to resistance. This tells you the currency pair has room to move higher before hitting resistance. Of course, if it has just broken up through resistance, it should continue to move higher. Using a technical indicator if you use a technical indicator, like the commodity channel index (CCI), on your signal chart to generate buy and sell signals, you can use that same indicator on your timing chart to help you identify when to enter or exit your trade. 39

41 HIGH-PROBABILITY TRADE SETUP Let s take a look at what a high-probability trade setup looks like using the multiple time-frame trading approach. We will be looking at an example of the EUR/USD using a weekly chart as the trend chart, a daily chart as the signal chart and a 1-hour chart as the timing chart. First, you look at your trend chart to see what direction the currency is trending. As you can see on the EUR/USD weekly chart, the currency pair has been in an upward trend for some time now. It would be foolish to fight this trend and try to sell the EUR/USD. 40

42 41 Next, you look at the signal chart to identify an appropriate buy signal for the EUR/USD. In this example, we are looking at using the commodity channel index (CCI) to generate the trading signal. You can see on the daily EUR/USD chart that the CCI gave a buy signal on 10 October 2007 as it crossed from below -100 to above The trend on the daily EUR/USD chart was also moving higher.

43 42 Lastly, you look at the timing chart to identify an appropriate time to buy the EUR/USD. You can see on the 1-hour EUR/USD chart that the currency pair is in an uptrend at the time the trading signal was given on the signal chart. You can also see that the CCI on the 1-hour chart had just given a buy signal at approximately the same time the CCI on the signal chart had generated its signal.

44 Seeing the trading signal generated on the signal chart line up so well with the trend on the trend chart and the currency movement on the timing chart should give you increased confidence in the probability of your trade making you money. Using multiple time frames provides you with more accurate trading information. Better information leads to better trades. Better trades lead to more profits and a happier you! 43

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46 Disclaimer None of the information contained herein constitutes an offer to purchase or sell a financial instrument or to make any investments. Norne Securities do not take into account your personal investment objectives or financial situation and make no representation, and assume no liability to the accuracy or completeness of the information provided, nor for any loss arising from any investment based on a recommendation, forecast or other information supplied from any employee of Norne Securities, third party, or otherwise. Trades in accordance with the recommendations in an analysis, especially, but not limited to, leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits. You should carefully consider your financial situation and consult your financial advisor(s) in order to understand the risks involved and ensure the suitability of your situation prior to making any investment or entering into any transactions. All expressions of opinion are subject to change without notice. Any opinions made may be personal to the author and may not reflect the opinions of Norne Securities. Risk Warning Trading in the products and services of the Norne Securities may, even if made in accordance with a Recommendation, result in losses as well as profits. In particular trading in leveraged products, such as but not limited to, foreign exchange, derivatives and commodities can be very speculative and losses and profits may fluctuate both violently and rapidly. 45