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)
Buy the Currency Shares Japanese Yen Trust (FXY) January, 2014 $95-$98 in-the-money bear put spread at $2.70 or best
expiration date: January 17, 2014
Portfolio weighting: 10%
Number of Contracts = 38 contracts
It looks like the yen is going to fall from here in the cash market at 104.18 straight down to last year’s low just above 105. That would take the (FXY) down to the $92 handle. It should do this right into the last trading day of the year, now that the Fed decision on the taper is out of the way.
So I am going to get aggressive here and not wait for my existing bear put spreads in the yen to reach their maximum theoretical values. I am going back to the 30% weighting that I had last week. This is turning out to be my most profitable trade of the year. Since my model trading portfolio is now up 63% on the year, I can afford to take a flier here.
I have been consistently negative on the yen for all of 2013. After a seven-month hiatus, it now appears that the next big leg down has begun. For readers to refamiliarize themselves with the fundamental case against the Land of the Rising Sun and the trigger for the latest collapse, please click here for “Selling the Yen, Again” at http://madhedgefundradio.com/selling-the-yen-again/, “Doubling Up On My Yen Shorts” at http://madhedgefundradio.com/doubling-up-on-my-yen-shorts/ , and “The Party is Just Getting Started With the Japanese Yen” at http://madhedgefundradio.com/the-party-is-just-getting-started-with-the-japanese-yen/ .
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.
If you can’t do the options then buy the leveraged short yen ETF (YCS) outright. We could be in for some mileage here.
Here are the specific trades you need to execute this position:
Buy 38 January, 2014 (FXY) $98 puts at……………$4.35
Sell short 38 January, 2014 (FXY) $95 puts at..…….$1.75
Profit at expiration: $3.00 – $2.60 = $0.40
(38 X 100 X $0.40 ) = $1,520 or 1.52% profit for the notional $100,000 portfolio.