Interpreting “Near Choice” Quotes for Risk Reversals

Summary

The answer interprets “near choice” as dealer jargon for a spread whose midpoint is close to zero. For a risk reversal, the proposed meaning is that buying one direction of the spread or the reverse direction costs roughly the same, with the trader specifying which side they want. The response relates this interpretation to a quote described as a small amount “your choice,” where either direction can be entered for that amount.

The answer suggests that this corresponds approximately to calls and puts having similar prices, addressing the questioner’s guess about similar implied volatilities only indirectly. The author explicitly signals uncertainty about having encountered the phrase before, so the interpretation should be treated as a plausible extension of the cited dealer convention rather than a definitive market-wide definition. It gives no market, expiry, delta convention, or detailed pricing example to verify the usage.

Key ideas

• The answer interprets “near choice” as a spread whose midpoint is close to zero.
• Under this interpretation, either direction of the spread has a similar entry cost.
• The response suggests that similar call and put prices may be associated with the phrase.
• The author presents the interpretation tentatively and gives no market-specific verification.

Tags

# What does it mean when a risk reversal is near choice?


# What does it mean when a risk reversal is near choice?












I'm currently reading Kathy Lien's 'Day Trading and Swing Trading the Currency Market' and I came across this phrase on risk reversals: "near choice". What does it mean when risk reversals are near choice? My initial guess is that it means that both OTM calls and puts have roughly the same implied vols?

Thanks in advance!

## Answer by Alex C (score 2, accepted)

https://quant.stackexchange.com/a/25607

I think this is related to traders jargon. When a dealer quotes the price of a spread between two securities (such as a risk reversal) as "10 cents your choice" or "ten cents around" it means that the bid-ask midpoint is zero and it will cost you 0.10 USD to enter a position long the first security/short the second, and also 0.10 to short the first/long the second. Obviously you have to tell the dealer which one you want to do. In the more normal situation one security is worth more than the other and then the spread might be quoted as "forty twenty for the call" meaning you pay 40 cents to buy the call and sell the put, or receive twenty for the reverse.

By extension (and I have not heard the term before) it would seem the "near choice" would mean close to zero, but maybe not exactly zero. So yes, it would seem to mean that ATM puts and calls are approximately the same price.

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