Trade Alert - (FXE) March 6, 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) ? TAKE PROFITS
Sell the Currency Shares Euro Trust (FXE) April, 2015 $112-$115 in-the-money bear put spread at $2.97 or best
Closing Trade
3-6-2015
expiration date: April 17, 2015
Portfolio weighting: 10%
Number of Contracts = 43 contracts
This is one of the most profitable foreign currency trades that I have ever done.
In three short days, the euro has cratered 3.5% against the dollar. The obvious trigger was the announcement of the launch of European quantitative easing.
No doubt with a view to our position, the European Central Bank kindly brought the launch date forward from April 1 to March 9. Apparently, conditions are worse than they thought. Hence, the panic selling of the euro.
As a result, we have picked up a very quick 19% profit on the Currency Shares Euro Trust (FXE) April, 2015 $112-$115 in-the-money bear put spread.
We have already reaped 94% of he potential profit on this position. There is no point in carry on for six more weeks just to capture the last 6%. The risk reward doesn?t justify it.
However, if you bought the (EUO) instead, I would hang on. The beleaguered continental currency is clearly gunning for $1.05 against the buck, and then parity, so there will be more joy in this holding.
Give me a three cent rally in the euro and I will be back in there on the short side in a heartbeat. Until then, I will wait for the market to come to me.
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:
Sell 43 April, 2015 (FXE) $115 puts at?????$8.20
Buy to cover short 43 April, 2015 (FXE) $112 puts at..??.$5.23
Net Cost:??????????????????.....$2.97
Profit: $2.97 - $2.50 = $0.47
(43 X 100 X $0.47) = $2,021 or 2.02% profit for the notional $100,000 portfolio.
