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 - (FXY) – risk reduction
Sell the Currency Shares Japanese Yen Trust (FXY) May, 2013 $103-$106 in-the-money bear put spread at $2.70 or best
expiration date: May 17, 2013
Portfolio weighting: 10%
The next big down day in stocks is going to trigger a rally in the yen. The current mood in the market is to take all profits and revisit after the next big move. The gold margin calls are still rippling through the system, and the fund bankruptcies have yet to be announced. I am cutting back all positions in expectation of a more volatile and difficult to trade market in May.
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 42 May, 2013 (FXY) $106 puts at……………$6.10
Buy to cover short 42 May, 2013 (FXY) $103 puts at..…….$3.40
Profit: $2.70 - $2.40 = $0.30
(42 X 100 X $0.30) = $1,260 or 1.26% profit for the notional $100,000 portfolio.