Trade Alert – (FXY) September 11, 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. 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 to cover Short position in the Currency Shares Japanese Yen Trust September, 2012 (FXY) $126-$130 call spread at $0.65 or best

Closing Trade

9-11-2012

expiration date: September 21, 2012

Portfolio weighting: 15% = 45 contracts on a delta basis

This was a bet that the Currency Shares Japanese Yen Trust September, 2012 (FXY) trades at or below $126.35 on the September 21 expiration in eight trading days. That means that the cash market has to move up to ¥77.35 for you to lose money, against today’s spot of 78.25.

We are too close to the expiration and the strike to continue with this position. The risk/reward ratio is no longer compelling. If I am right and the Fed disappoints on QE3, the yen could have a short, sharp rally against us before settling back down. That would put our short position in the Currency Shares Japanese Yen Trust September, 2012 (FXY) $126-$130 call spread in the money to our detriment. So it’s sayonara baby to the yen, at least for the time being.

The market can be illiquid for the deep out of the money $130 calls. If nothing happens then start raising your bid in 5 cent increments until something happens.

These are the trades you should execute:

Buy to cover short 45 September, 2012 (FXY) $126 calls a…$0.70
Sell 45 September, 2012 (FXY) $130 calls at………………….$0.05
Net cost:………….………………………………………………$0.65

Loss: $0.65 – $0.30 = $0.35

(45 X 100 X $0.35) = $1,575, or 1.56% profit for the notional $100,000 portfolio.

You Can Be So Cruel!