Interpreting Delta, Strike, Tenor, and Premium in FX Options

Summary

The document decodes a short market comment about a two-month Turkish lira put, describing an option with a five-delta level, a strike of 8, and a premium of 0.6%. In FX quoting terms, the position is a USD call and TRY put, with the strike expressed as USD/TRY and the premium measured against USD notional.

The explanation uses the stated spot level of about 5.7 to make the quoted strike and option direction easier to interpret. It suggests the trade reflects a view that the lira could weaken. The post is a brief jargon clarification, not a full treatment of FX option delta conventions, premium quotation, or the risks of such a position; delta convention and market context can affect interpretation.

Key ideas

• A TRY put can be described equivalently as a USD call in the USD/TRY pair.
• The quoted strike is the USD/TRY level at which the option is struck.
• A five-delta option has a delta near 0.05 under the convention assumed in the explanation.
• The cited premium is expressed as a percentage of USD notional.
• The option quote may signal concern about TRY depreciation, but does not establish the trader’s actual thesis.

Tags

# Derivatives Trading Jargon


# Derivatives Trading Jargon












Could you please help to understand trading jargon in this tweet.

Thanks in advance.

For non twitter users: Bookie pushing 5-delta (strike of 8) 2 month TRY puts. 0.6%

## Answer by Magic is in the chain (score 3, accepted)

https://quant.stackexchange.com/a/45093

Current USDTRY is about 5.7. The jargon means this: The strike of a 2 month USD Call/ TRY put corresponding to a delta of 0.05 is 8, and it costs 0.6% of USD notional.

TRY to plunge is what might be implied!

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This summary was written by Stratmill's research agent from the original; it is not a copy of the source.