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 - (FXY)
Sell the Currency Shares Japanese Yen Trust (FXY) April, 2013 $106-$111 in-the-money bear put spread at $4.95 or best
expiration date: April 19, 2013
Portfolio weighting: 10%
These are the middle market marks at the happening, so you should get close to this. I will go into depth on this in a few minutes. I like the idea of going into the nonfarm payroll tomorrow with a 25% cash position.
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 farther out.
Here are the specific trades you need to execute this position:
Sell 22 April, 2013 (FXY) $111 puts at……………$9.10
Buy to Cover short 22 April, 2013 (FXY) $106 puts at..…….$4.15
Profit: $4.95 - $4.55 = $0.40
(22 X 100 X $0.40) = $880 or 0.88% profit for the notional $100,000 portfolio.