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 $112-$117 in-the-money bear put spread at $4.95 or best
Closing Trade-not for new readers
expiration date: February 15, 2013
Portfolio weighting for this spread: 10% = 22 contracts
We have sucked the marrow out of this one so it is time to take profits. The Currency Shares Japanese Yen Trust (FXY) February, 2013 $112-$117 in-the-money bear put spread has soared from $4.20 to $4.95 in a mere 11 trading days. The collapse of Japan’s beleaguered currency has proceeded right on schedule.
At this morning’s opening, we have harvested 94% of the potential $5.00 value of the trade. I want to free up the cash to roll into a more aggressive March position, especially if we get a brief rally in the 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 buy the legs individually or you will end up losing much of your profit up front. If you don’t get filled, then just wait for the next Trade Alert. There will be many fish in the sea.
The same applies if, for any reason, you don’t understand this trade. Better to watch this strategy unfold on paper in the model portfolio before you try it with real money.
Keep in mind that these are ball park 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) $117 puts at……………………….…$9.20
Buy to cover short 22 February 2013 (FXY) $112 puts at..……….$4.25
Profit: $4.95 – $4.20 = $0.75
(22 X 100 X $0.75) = $1,650 or 1.65% profit for the notional $100,000 portfolio.