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)
Sell the Currency Shares Japanese Yen Trust (FXY) February, 2013 $113-$118 in-the-money bear put spread at $4.95 or best
expiration date: February 15, 2013
Portfolio weighting: 10% = 22 contracts
We have a new three year low on the Japanese yen this morning. The (FXY) has cratered to $106.70, and the (YCS) has rocketed to $55.50. We have already captured 94% of the potential $5.00 maximum value of this trade, so let’s not wear our welcome and pull the ripcord.
This makes four consecutive all time highs in the Trade Alert performance, with January now up 14%. That is what you paid for. Please send me some testimonials and I’ll run them in the Monday letter. JT.
Make sure you only use a limit order on this, as the $118 puts have gone illiquid and have a 30 cent spread on the screen. The market makers are just waiting to pounce on you for a free lunch.
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 up front.
Keep in mind that these are ballpark prices only. Spread pricing can be very volatile on expiration months farther out.
These are the trades you should execute:
Sell 22 February 2013 (FXY) $118 puts at………………..………$10.15
Buy to cover short 22 February 2013 (FXY) $113 puts at..……….$5.20
Profit at expiration: $4.95 - $4.20 = $0.75
(22 X 100 X $0.75) = $1,650 or 1.65% profit for the notional $100,000 portfolio.