With a resolution of the fiscal cliff imminent, I am going to take off my last “RISK OFF” position that I used to hedge all of my other remaining “RISK ON” positions in Apple, Google, the S&P 500, and the Russell 2000.
The Currency Shares Euro Trust (FXE) January, 2013 $126-$131 in-the-money bear put spread did its job well. It provided ample downside protection during the post election market melt down, generating a 3.5% profit at the lows I could use to offset other losses. Since then, the market has come roaring back, wiping out the (FXE) profit and generating a loss. The best that can be said for this position here is that I only committed 5% of my portfolio.
With QE3 plus QE4 = QE7, the dollar is the runner up in the race to the bottom, with the Japanese yen in first place. So far, European Central Bank president, Mario Draghi, has only talked about such measures. That opens the way for a stronger Euro, which now looks poised to challenge $1.35. Time to cut-and-run from bearish positions. By coming out here, I also duck the huge time decay over the holidays, now that we are out-of-the-money.
I Think, Perhaps, Maybe, I Just Might….