Trade Alert - (FXE) April 14, 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.
Trade Alert - (FXE) ? BUY
BUY the Currency Shares Euro Trust (FXE) May, 2015 $99-$102 in-the-money bull call spread at $2.55 or best
Opening Trade
4-14-2015
expiration date: May 15, 2015
Portfolio weighting: 10%
Number of Contracts = 39 contracts
No, this is not a typo. Nor am I taking the ?High? in High Sierra too literally. Yes, I am buying the euro here.
Here is my twisted logic. The complete collapse of the Euro from mid-December, from $1.24 to $1.03 to the dollar was so sudden and extreme, that it is going to take a while to digest, possibly as long as six months.
We are only 2 ? months into that digestion period now. So we could continue to move in a sideways, volatile, narrowing trading range of $1.03-$1.10 possibly until August, or 3 ? more months.
Since there is now universal sentiment that the Euro is headed for parity against the buck, the options are now very richly priced. I can therefore jump in here and make a quick 10%-15% on a brief counter trend short covering rally.
Call this a counter trend, non-consensus trade. I can also use this as a hedge against my many other long stock positions.
The Currency Shares Euro Trust (FXE) May, 2015 $99-$102 in-the-money bull call spread is showing a middle market price on my screen of $2.55 right now. You can pay anywhere from $2.40-$2.70 for this spread and it still makes sense.
Don?t hold me to these prices. They are ballpark estimates, at best. The spread on deep in the money are wide.
But if you place a limit order close to my price, you should get done. If not, then keep moving it up in penny increments until you get done.
If you can?t buy do the options, then just buy the (FXE) outright for a quick trade.
It is just a matter of time before the buck breaks parity with the euro. Eventually, the (FXE) will reach the apex of a triangle in its price movement, and then break down once again. But I think that time is later, not sooner.
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 May, 2015 (FXE) $99 calls at?????$6.25
Sell short 39 May, 2015 (FXE) $102 calls at..??.$3.70
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.
