Don't ignore these massive impending FX option expiries 

It's not an exact science, but large FX option strikes can influence spot as expiry approaches. Some sizeable G10 options expire at Thursday's 10 a.m. New York cut, but Friday's are significantly larger and more likely to affect spot if it trades near them.

The largest EUR/USD strikes expiring Friday are 1.1075 (€1.6 billion), 1.1100 (€1.8 billion), 1.1150 (€5.5 billion), 1.1175 (€2 billion) and 1.1200 (€4.2 billion).

Other Friday expiries include USD/CHF at 0.8205 ($457 million) and 0.8325 ($610 million), and GBP/USD at 1.3200 (£470 million) and 1.3300 (£726 million).

In AUD/USD, the largest are 0.7000-10 (A$1.2 billion) and 0.7025-30 (A$1.6 billion). USD/CAD expiries are at 1.3900 ($752 million), 1.3960-65 ($1.4 billion) and 1.4030 ($1 billion).

Standout USD/JPY expiries on Friday are 156.95-157.00 ($1.6 billion), 157.75-85 ($1 billion), 158.00 ($2 billion) and 158.10-20 ($900 million).

Institutions that supply and manage liquidity may have hundreds of trades on their books at any one time. These require constant hedging to limit exposure to the related currency pairs, often in the spot market. As expiry approaches (10 a.m. New York for G10 pairs), hedging flows typically increase because the option's value becomes more sensitive to spot. If an option is likely to be exercised, the seller may need to buy or sell more of the underlying currency to meet its obligation.

If a strike is near spot, these hedging flows can often pull spot towards it and help contain price action until expiry, so it's worth knowing where the strikes are in advance.

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