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 the Currency Shares Euro Trust (FXE) November, 2014 $128-$130 in-the-money bear put spread at $1.65 or best
expiration date: November 21, 2014
Portfolio weighting: 10%, increasing my euro short from 10% to 20% with the addition of the November strike
Number of Contracts = 60 contracts
You can buy this put spread anywhere within $1.60-$1.70 and have a reasonable expectation of making money on this trade.
If you are unable to do options, the alternate trade would be to buy the (EUO) ETF at market price.
Keep in mind that the options market is highly illiquid now, so don?t hold me to these prices. They are ballpark estimates, at best.
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 60 November, 2014 (FXE) $130 puts at?????$4.75
Sell short 60 November, 2014 (FXE) $128 puts at..??.$3.10
Potential Profit: $2.00 – $1.65 = $0.35
(60 X 100 X $0.35) = $2,100 or 2.10% profit for the notional $100,000 portfolio.