Trade Alert - (FXE) February 20, 2018 BUY
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) - BUY
BUY the Currency Shares Euro Trust (FXE) March, 2018 $120-$123 in-the-money vertical BEAR PUT spread at $2.50 or best
Opening Trade
2-20-2018??
expiration date: March 16, 2018
Portfolio weighting: 10%
Number of Contracts = 40 contracts
I think the Euro is topping out here, putting in a triple top at the $120.60 level.
After ignoring the 88 basis point rise in the US ten year Treasury bond for the past six months, the foreign exchange markets are finally taking notice.
From here, rising American interest rates really start to hurt.
I have been out of the currency market for a while now because I always believed the weak dollar in the face of rising interest rates to be a short term counter trend move.
I am therefor going to buy the Currency Shares Euro Trust (FXE) March, 2018 $120-$123 in-the-money vertical BEAR PUT spread at $2.50 or best.
This is a bet that the Currency Shares Euro Trust (FXE) will trade below $120 by the March 16 options expiration in 18 trading days.
Don???t pay more than $2.70 for this position or you???ll be chasing.
If you don???t do options, sell short the (FXE) outright.
We have an unusual tailwind in this trade in that Euro futures long positions held by institutions are at an all-time high (see chart below). Once we break technical support, you could really see a major melt down.
By the way, there is another facet to the falling Euro trade. It means that the profits and share prices of Europe companies should take off like a rocket as they benefit mightily from a falling home currency.
The Wisdom Tree Europe Hedged Equity Fund (HEDJ) is the perfect vehicle with which to play this trend, as it is long stocks but short the Euro.
Here are the specific trades you need to execute this position:
Buy 40 March 2018 (FXE) $123 puts at??????.?????????$4.30
Sell short 40 March 2018 (FXE) $120 puts at?????????.$1.80
Net Cost:??????????????????????????????.????????????..??????.???.....$2.50
Potential Profit: $3.00 - $2.50 = $0.50
(40 X 100 X $0.50) = $2,000 or 20.00% in 18 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.