Follow Up to Trade Alert - (FXE) August 17, 2015
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 - (FXE)-UPDATE
Buy the Currency Shares Euro Trust (FXE) September, 2015 $112-$115 in-the-money vertical bear put spread at $2.55 or best
Opening Trade
8-17-2015
expiration date: September 18, 2015
Portfolio weighting: 10%
Number of Contracts = 39 contracts
This is not so much a trade addressing the health of the monetary policy of Europe, which is showing actual green shoots, however miniscule they may be, which I witnessed in person this summer.
It is more about what my friend, our esteemed Federal Reserve Chairman Janet Yellen, may or may not do in September.
My currency Trading 101 handbook tells me that rising interest rates make currencies stronger at the expense of all the others.
I have no clue what my former UC Berkeley economics professor is going to do next month. But the prospect of any action should be enough the scare the bejesus out of Euro holders. At the very least, it should freeze them into inaction until decision day on September 17.
It not like the Euro is in the pink of health either. Q2 GDP growth came in at only 0.3%, much weaker than expected, demonstrating that the ?green shoots? from Euro quantitative easing have bare budged broken the ground.
And looking at my credit card bills for the summer, I know I am responsible for at least a third of that, and maybe more.
We also have to consider the Chinese Yuan. The near 5% spike up last week, which gave the Euro a much needed shot of adrenaline, looks to be a onetime deal only. Now that it has been digested by the markets, the beleaguered European currency should settle back to earth.
That is all you need to make a nice profit on the Currency Shares Euro Trust (FXE) September, 2015 $112-$115 in-the-money vertical bear put spread. Play this one right, and you should make a 17.64% gross profit in 23 trading days.
If we take another run with the Euro down to $103 one more time, then you will be able to capture most of that profit well before then.
That?s better than a poke in the eye with a sharp stick.
You can pay up to $2.70 for this spread and it still makes sense. If you can?t do the options, then just buy the ProShares Ultra Short Euro ETF (EUO) outright.
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. Spread pricing can be very volatile on expiration months farther out.
If the price of this spread has moved more than 5% by the time you receive this Trade Alert, don?t chase it. Wait for the next one. There are plenty of fish in the sea.
Here are the specific trades you need to execute this position:
Buy 39 September, 2015 (FXE) $115 puts at?????$6.10
Sell short 39 September, 2015 (FXE) $112 puts at..??.$3.55
Net Cost:????????????????.....$2.55
Potential Profit: $3.00 - $2.55 = $0.45
(39 X 100 X $0.45) = $1,755 or 1.76% profit for the notional $100,000 portfolio.
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