The Trading Floor with David Axtell

Constant volatility is a convenient assumption, not reality. This episode introduces local volatility, stochastic volatility and other model approaches used to capture changing market behaviour.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 23 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Ask for the rate risk on a single-currency swap and you get one number: its DV01. Ask about a cross-currency swap and a single number is dangerously incomplete. Episode seven shows why the risk is a vector — projection and discount curves, in each currency, across tenors — and why the seductive error is collapsing it into one convenient summary. Host David Axtell covers key-rate risk and the curve twists a flat summary hides, how you hedge each factor with an opposite-signed instrument, and why hedging is a governed, dynamic process, not a trade you place and forget. Companion season to Cross-Currency Swaps and Basis Trading, out 15 December.

Listed and OTC currency options can share strike and expiry but differ in contract design, settlement, liquidity and margin. This episode explains why those differences matter in fast markets.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 22 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

When spot moves, the volatility surface can move in different ways. Explore sticky-strike and sticky-delta behaviour, Vanna exposure and why surface dynamics matter to hedging.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 21 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

OTC options, listed options and futures can hedge similar risks with very different liquidity, margin, documentation and operational consequences. This episode compares the market structures.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 20 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Attractive coupons in structured notes often come from embedded option sales. This episode breaks down the economic trade hidden inside the wrapper and the risks investors may actually be taking.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 19 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

FX options do not trade in isolation. This episode connects currencies with equities, rates, commodities and global risk appetite to show how cross-asset information changes pricing and hedging.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 18 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Central-bank decisions can lift implied volatility before an announcement and crush it afterward. This episode explains event risk, volatility repricing and the options market around policy meetings.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 17 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Emerging-market currencies add capital controls, non-deliverability, liquidity gaps and political constraints. Learn why standard FX option techniques need adjustment in restricted markets.

This episode is part of FX Options Daily, a 30-day themed season of The Trading Floor covering pricing, hedging, exotics, risk and institutional FX options practice.

Full treatment: Chapter 16 of FX Options.

Educational content only. Nothing in this episode constitutes investment advice.

Two treasurers call the same dealer, the same morning, for the same swap — and get different numbers. Neither is being cheated. Episode six opens the gap between what a cross-currency swap is worth and what a dealer will quote you. Host David Axtell builds the clean par rate from a zero-PV condition, then decomposes the quote component by component — credit, funding, capital, operations, profit — and shows why the capital charge is very often the single largest piece. Plus why the same trade costs different clients different amounts. Companion season to Cross-Currency Swaps and Basis Trading, out 15 December.