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 - (FXA) – BUY
BUY the Invesco Currency Shares Australian Dollar Trust (FXA) August 2019 $67-$69 in-the-money vertical BULL CALL spread at $1.80 up to $1.90
Opening Trade
7-15-2019
expiration date: August 16, 2019
Portfolio weighting: 10%
Number of Contracts = 56 contracts
With three interest cuts on the calendar by yearend, the US is about to become the fastest interest rate cutting economy in the world. And as sure as heavy rain follows dark storm clouds on the horizon, that means the US dollar is about to become world’s weakest currency.
I am therefore buying the Invesco Currency Shares Australian Dollars Trust (FXA) August 2019 $67-$69 in-the-money vertical BULL CALL spread at $1.80 or best.
This is a bet that (FXA) shares will not fall below the $69.00 strike price by the August 16 options expiration date.
Don’t pay more than $1.90 for the position or the risk/reward will turn against you.
If you don’t do options, buy a small position the (FXA) outright for a quick trade.
I am picking the Aussie for the following reasons:
1) With Australian dollar interest rates already lower than those for the US, Aussie rates have less to go before they hit zero.
2) Australia’s major commodity increases, like iron ore and gold (GLD), are seeing substantial price increases. BHP Billiton (BHP) is up 31% so far in 2019.
3) An eventual end to the China trade war will bring a resumption of huge Asian capital flows into Australian real estate.
4) The Aussie has already down 30% from its early 2014 high and is long overdue for a snap back rally.
Here are the specific trades you need to execute this position:
Buy 56 August 2019 (FXA) $67 calls at………….………$3.90
Sell short 56 August 2019 (FXA) $69 calls at………….$2.10
Net Cost:……………………..…….………..……..................$1.80
Potential Profit: $2.00 - $1.80 = $0.20
(56 X 100 X $0.20) = $1,120 or 11.10% in 24 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.
