Trade Alert - (FXE) December 11, 2017
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
Trade Alert - (FXE)- TAKE PROFITS
SELL the Currency Shares Euro Trust (FXE) December 2017 $116-$118 in-the-money vertical bear put spread at $1.99 or best
Closing Trade-NOT FOR NEW SUBSCRIBERS
12-11-2017
expiration date: December 15, 2017
Portfolio weighting: 10%
Number of Contracts = 56 contracts
I am going to take the win here on my short position in the Euro (FXE). As a result, you earned a 19.79% profit in 19 trading days.
Everything unfolded as planned with this trade. The tax bill moved forward, the US economy heated up, US interest rates rose, and the Euro fell.
There are only four trading days left until expiration, and with 95.45% of the maximum potential profit in hand, the risk/reward of continuing is no long favorable.
So I am taking profits in my position in the Currency Shares Euro Trust (FXE) December 2017 $116-$118 in-the-money vertical bear put spread at $1.99 or best.
Always leave the last penny for the next guy.
We received a gift three weeks ago in the form of a huge spike in the Euro (FXE) on the back of strong German GDP figures.
As amazing as it may seem, Europe is now growing faster than the 3% recently seen in the US economy, potentially bringing forward the end of its own quantitative easing program of monetary expansion.
This is Euro positive.
However, I believe the seminal event of the coming year will be the faster rise of US interest rates.
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 continue to stay lower for longer.
Longer term, this is all Euro negative.
Rising dollar rates, falling Euro rates, sounds like a trade to me.
Keep in mind that liquidity in the Euro market is usually poor after the Continent shuts down for the day, so get done what you can, but only at your prices.
This was a bet that the (FXE) will trade at or below $116 by the December 15 expiration date, compared to the then current $113.76, in 23 trading days.
If you bought the ProShares Ultra Short Euro ETF (EUO) instead, the 2X short Euro fund, a bet that the Euro will fall against the greenback, keep it. The Euro is going lower.
Here are the specific trades you need to execute this position:
Sell 56 December, 2017 (FXE) $118 puts at...........................................$4.15
Buy to cover short 56 December, 2017 (FXE) $116 puts at....................................$2.16
Net Proceeds:.......................................................................................$1.99
Profit: $1.99 - $1.78 = $0.21
(56 X 100 X $0.21) = $1,176 or 11.79% in 19 trading days
To see how to enter this trade in your online platform, please look at the order ticket above, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on How to Execute Vertical Call and Put Debit Spreads by clicking here.
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Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
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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 close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.
