Trade Alert – (FXY) June 6, 2012

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)

Sell the (FXY) September $121 puts at $1.50 or best

Closing Trade – Stop loss sale


expiration date: September 21, 2012

Portfolio weighting: 10%

($10,000/100/$1.50) = 30 Contracts

I am going to use this big “RISK ON” day to get rid of my poorly performing short position in the Japanese yen (FXY). I’m sure this trade will come good someday. But with an options position, time is money, and I can’t wait out the incompetence of the Japanese authorities.

The loss on this position is $1.70 and amounts to (30 X $1.70 X 100) = $5,100, or 5.10% for the notional $100,000 portfolio. A mitigating factor here should be the 2.76% that I’ll take in with premium income by selling short the May and June (FXY) call spreads against this position to protect against time decay.

A 2.24% cost for a six week look at a short position in the currency of the world’s structurally weakest economy is not such a bad deal. You can’t win the lottery if you don’t buy a ticket.