When a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what security to buy, 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)- BUY
Buy the Currency Shares Euro Trust (FXE) January, 2017 $106-$109 in-the-money vertical bear put spread at $2.57 or best
?Opening Trade
12-12-2016
Expiration Date: January 20, 2016
Portfolio Weighting: 10%
Number of Contracts = 38 contracts
There is an absolutely massive disparity going on between the monetary policies of Europe and the United States.
Europe is now committed to at least another year of quantitative easing (QE) to reflate their sagging economy. Brexit and the recent Italian referendum threw gasoline on the fire.
In the meantime, interest rates in the US are skyrocketing. Not only has QE been gone for more than two years, a massive round of fiscal stimulus is about to hit he economy.
And here is a basic rule for foreign currency trading: INTEREST RATE DIFFERENTIALS ARE FAR AND AWAY THE LARGEST DETERMINANT OF FOREIGN EXCHANGE RATES.
Rising US interest rates and falling European ones can only mean one thing: the dollar will rise and the Euro will fall.
Only last week, ECB President Mario Draghi said he would expand the types of securities eligible for QE, making it easier to expand the money supply. This was terrible news for the Euro.
This has been my position in the market for the last five months.
The trick is how to enter a trend that is well on its way.
Today, we got a gift in the form of profit taking on Euro shorts ahead of the Federal Reserve announcement on interest rates at 2:00 PM on Wednesday.
You also saw this in the collapse of gold this morning, another victim of higher US interest rates.
This is a bet that the Currency Shares Euro Trust (FXE) will trade at or below $106 by the January 20th expiration date in 27 trading days. Much of this will be over the holidays when volume shrinks and markets normally go to sleep.
You can pay all the way up to $2.75 for this spread and it still makes sense.
If you can?t trade options, then buy the ProShares Ultra Short Euro ETF (EUO), the 2X short Euro ETF.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of OptionsHouse.
If you are uncertain about how to execute an options spread, please watch my training video How to Execute a Bear Put Spread.
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.
Please keep in mind these are ballpark prices at best. After the text alerts go out, prices can be all over the map. There is no telling how much the market will have moved by the time you get this email.
Paid subscribers, be sure you've signed up for our FREE text alert service. When seconds count, this feature offers a distinct trading advantage.? In today's volatile markets, individual investors need every advantage they can get.
Here Are the Specific Trades You Need to Execute This Position:
Buy 38 January, 2017 (FXE) $109 puts at????.?.??$6.00
Sell short 38 January, 2017 (FXE) $106 puts at.????..$3.43
Net Cost:???????????????????......$2.57
Potential Profit: $3.00 - $2.57 = $0.43
(38 X 100 X $0.43) = $1,634 or 16.73% in 27 trading days
