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.
Further Update to: Trade Alert - (FXE)
Buy the Currency Shares Euro Trust (FXE) September, 2014 $133-$135 in-the-money bear put spread at $1.63 or best
Opening Trade
8-7-2014
expiration date: September 19, 2014
Portfolio weighting: 10%
Number of Contracts = 61 contracts
The entire foreign exchange world has been on hold this week, waiting for ECB president Mario Draghi to announce a well-deserved cut in Euro interest rates this morning.
The sanctions war with Russia is escalating by the day. Today, Russia banned food imports from the US and Europe, a mere $1 billion trade hickey for us, but a $15 billion punch to the gut for the continentals. Economists are paring expectations for European GDP growth for this year as fast as they can.
Italy announced a shocking dive in Q2 growth yesterday, and German data is deteriorating by the day, where some 300,000 jobs are dependent on trade with Russia.
The European bond market has certainly gotten the message. The yield on ten year German bunds hit another all time low at 1.09% this morning, while the return on two year paper fell below zero!
Throwing more fat on the Euro fire were the just announced American weekly jobless claims, plunging by 14,000 to a new seven year low of 289,000. This augers for high US interest rates sooner, which is hugely dollar positive and Euro negative.
So given all this, Draghi?s announcement that there would be no interest rate cut whatsoever went over like a lead balloon. You would have expected the Euro to rocket a few cents on this news, thanks to the further yield support.
It didn?t, not even for a second.
Instead, another round of frustrated short sellers hit the market big time, who had been waiting for better prices at which to sell. I was one of those.
With the rapidly deteriorating fundamentals, selling short the Euro has become this year?s one way, ?free money? trade. It is a classic trading nostrum that if you throw good news on an asset and it fails to rally, you sell the hell out of it.
I will reiterate my long time targets for the beleaguered continental currency of $1.27, then $1.18, and possibly as low at $1.00. How quickly will we get to these low numbers?
Just ask Vladimir Putin.
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 61 September, 2014 (FXE) $135 puts at?????$3.40
Sell short 61 September, 2014 (FXE) $133 puts at..??.$1.77
Net Cost:??????????????????.....$1.63
Potential Profit: $2.00 - $1.63 = $0.37
(61 X 100 X $0.37) = $2,257 or 2.26% profit for the notional $100,000 portfolio.
