Why does the FX market quote the vol against delta?

[boulala]

Hi there,

can someone explaint to my why FX options are quoted as volatility-delta pairs? I j know that stock options are quoted as strike-volatility pairs?
why not the same in FX?

regards
boulala

 

[Ken Abbott]

It might be because of the peculiarities of the vol smile in FX. Often there are two different models used - one to price and one to hedge.

 

[boulala]

so it is quoted as vol-delta, because the vol is used to price and the delta for hedging purposes?

 

[financeguy]

I don't think there's a great reason here, honestly. The same models are used for pricing and risk management. I actually find it easier to think about relative value smile trading in delta space rather than strike space, so I don't mind the FX quoting convention.