Trade Alert – (FXE) May 7, 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 - (FXE)

Sell short the Currency Shares Euro Trust (FXE) May, 2012 $132 Calls at $0.19 or best on a 2:1 basis, 20% weighting.

Opening Trade


expiration date: May 19, 2012

Portfolio weighting: 20% = 50 Contracts

Everything that I expected to happen in yesterday’s French presidential election happened, and as a result, things are a whole lot worse in Europe. Socialist Francois Hollande won, so austerity is out the window, France’s borrowing binge accelerates, and the Germans go back to being the Boche. This is all highly negative for the Euro, which is about to break the key $1.2950 support level, the Rock of Gibraltar support for the last four months. Expect cascading selling to follow.

So I am happy to sell the (FXE) May $132 calls against my existing (FXE) June $130 puts on a 2:1 basis. If you want to be conservative then you can short the $132 calls on a 1:1 basis. The margin requirement will be much smaller. If these expire out of the money in nine trading days, as I expect, it will add 0.90% (50 X $0.19 X 100), or $950 to the value of your notional $100,000 portfolio. The $132 strike is at the top of the recent trading range. So these looks pretty safe for a very short term play.