Trade Alert – (FXA) September 13, 2012

As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price.

Trade Alert – (FXA)

Stop Loss- cover the Short the Currency Shares Australian Dollar Trust October, 2012 (FXA) $105-$108 call spread at $1.05 or best

Closing Trade

9-13-2012

expiration date: October 19, 2012

Portfolio weighting: 10% = 45 contracts on a net delta basis

Time to take our spanking and move on. The real killer for this trade was the surprise $150 billion Chinese supplementary budget announced last week, which sent the entire resource space soaring. The double hit came today with the announcement of QE3 which I was not expecting. At least we shrunk the book down to a size where this is not a life threatening event. For the more active traders this loss is more than offset by the huge gains in gold (GLD) and Apple (AAPL).

These are the trades you should execute:

Buy to cover short 45 October, 2012 (FXA) $105 calls at……$1.30
Sell 45 October, 2012 (FXA) $108 calls at…………………….$0.25
Net Premium:………….…………….…………………..………$1.05

The loss on the trade: $1.05 – $0.35 = $0.70

($0.70 X 100 X 45) = $3,150, or 3.15% for the notional $100,000 model portfolio.