The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again at Option Alpha. Welcome back to the daily call. Today, we are answering another question from our community and that is “Should you hedge domestic currency risk by trading Forex?” A couple of episodes ago, we gave you a brief description of the Forex markets which you can go back to and listen, but now, the question from somebody is “Okay. If I have a lot of my assets denominated in Australian dollars or Canadian dollars or Euro, then should I hedge my domestic currency risk by trading Forex? Should I protect it in some cases?” And so, I think the natural answer to this or the easy answer to this would be yes, like people would assume yes. “Oh my gosh! Absolutely! You have to hedge your domestic currency risk.” I think it can be hedged easily by just trading ETFs or trading currency pairs in other markets. We often trade a lot of the Forex currency type ETFs like FXE, FXY, etcetera, so that’s an easy answer. But the easy answer being yes is not actually what we see in a