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)
Buy the Currency Shares Japanese Yen Trust (FXY) May, 2013 $101-$104 in-the-money bear put spread at $2.05 or best
Note: This is in addition to the Currency Shares Japanese Yen Trust (FXY) May, 2013 $103-$106 in-the-money bear put spread at $2.40 or best and the Currency Shares Japanese Yen Trust (FXY) May, 2013 $102-$105 in-the-money bear put spread at $2.40 or best
expiration date: May 17, 2013
Portfolio weighting: 10%
Number of Contracts = 50 contracts
Sell into the free fall! They are going to crush the yen on the Monday opening in Tokyo. Time to double up and snag up the strikes again. ¥100 to the dollar in the cash market is the immediate target, down from ¥97.60 now.
So I am going to pay up here in terms of risk and strikes and put back on another 10% position. This is our big money maker for the year. What endurance this currency has! This is a six week few expiring on May 17, so it should work. Other than profit taking on existing shorts, I doubt you’ll see any real buying of the yen in the wake of the BOJ’s momentous move yesterday for quite some time.
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:
Buy 50 May, 2013 (FXY) $104 puts at……………$4.30
Sell short 50 May, 2013 (FXY) $101 puts at..…….$2.25
Profit at expiration: $3.00 – $2.05 = $0.95
(50 X 100 X $0.95) = $4,750 or 4.75% profit for the notional $100,000 portfolio.