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. This is your chance to ‘look over’ John Thomas’ shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen.
Trade Alert – (FXE)
Sell the Currency Shares Euro Trust (FXE) November, 2013 $138-$141 bear put spread at $2.95 or best
expiration date: 11-15-2013
Portfolio weighting: 10%
Number of Contracts = 38 contracts.
This short position has been a total home run of a trade, with the Euro going into freefall when the ink was barely dry on the Trade Alert.
Rumors swept the foreign exchange pits this morning of a potential interest rate cut by the European Central Bank next week, which they really should have done a long time ago. Otherwise, the strong continental currency will strangle a nascent continental recovery.
The Currency Shares Euro Trust (FXE) November, 2013 $138-$141 bear put spread has gapped up an eye popping 11.3% in value in just two days. As a result, we can realize 86% of the potential profit in this morning’s market. There just is not enough blood left in this stone to make it worth holding 11 more trading days.
I wish they were all this easy. On to the next one!
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous. Don’t execute the legs individually or you will end up losing much of your profit.
Keep in mind that these are ballpark prices only. Spread pricing can be very volatile on expiration months further out.
Here are the specific trades you need to execute this position:
Sell 38 November, 2013 (FXE) $141 puts at………………..…$6.50
Buy to cover Short 38 November, 2013 (FXE) $138 puts at.….$3.55
Profit: $2.95 – $2.65 = $0.30
($0.30 X 100 X 38) = $1,140, or 1.14% for the notional $100,000 model portfolio.