Trade Alert - (FXE) August 23, 2016
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)- BUY
Buy the Currency Shares Euro Trust (FXE) September, 2016 $112-$115 in-the-money vertical bear put spread at $2.63 or best
Opening Trade
8-23-2016
expiration date: September 16, 2016
Portfolio weighting: 10%
Number of Contracts = 39 contracts
I think the fix is in. Fed vice chairman Stanley Fischer showed his hand a couple of days ago.
Fed speakers will talk up the chance of an interest rate rise all the way until their September 20-21? Federal Open Market Committee (FOMC) meeting. They will then do absolutely nothing.
So until then, you can expect the entire yield play space to trade sideways or get battered. That?s all we need for this position to work.
Higher interest rates are great news for the US dollar and terrible for all other currencies.
Interest rate differentials are far and away the largest driver of foreign exchange markets.
In the meantime, Europe will continue to signal that their rates will stay lower for longer.
Rising dollar : falling Euro sounds like a trade to me.
I am therefore buying the Currency Shares Euro Trust (FXE) September, 2016 $112-$115 in-the-money vertical bear put spread.
This is a bet that the (FXE) will trade at or below $112 by the September 16 expiration date in 17 trading days.
You can pay all the way up to $2.75 for this spread and it still makes sense.
If you can?t trade options then buy the ProShares Ultra Short Euro ETF (EUO), the 2X short Euro fund.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of optionshouse.
If you are uncertain on how to execute an options spread, please watch my training video on ?How to Execute a Bear Put Spread? by clicking here at https://www.madhedgefundtrader.com/ltt-executetradealerts/. You must me logged into your account to view the video.
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.
Here are the specific trades you need to execute this position:
Buy 39 September, 2016 (FXE) $115 puts at????.?.??$4.80
Sell short 39 September, 2016 (FXE) $112 puts at.????..$2.17
Net Cost:???????????????????......$2.63
Potential Profit: $3.00 - $2.63 = $0.37
(39 X 100 X $0.37) = $1,443 or 14.06% in 17 trading days
