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) August, 2014 $136-$138 in-the-money bear put spread at $1.72 or best
Opening Trade
7-3-2014
Expiration date: August 15, 2014
Portfolio weighting: 10%
Number of Contracts: 58
We saw the multi month selloff going into the European Central Bank?s announcement of interest rate cuts and quantitative easing last month. Since then we have seen a classic ?buy the rumor, sell the news? short covering rally that has taken the euro up a counterintuitive two points.
The second move is just about to run out of steam.
Weakening data from the European economy, which is trailing that of the US, Japan, Australia and even China, suggests that the Euro zone will see more easing before it experiences a tightening.
That is bad for the Euro and great for the US dollar. So I am happy to sell short the beleaguered European currency here.
I have also been devious in the selection of my strikes. The near $136 put strike that I am shorting here against the long $138 put is exactly 50% of the move down from the double top at the March and May highs.
It also helps that the (FXE) was firmly rejected from the 50 day moving average.
We are getting a further assist from the calendar, which is giving us an unusually short expiration on August 15. Most of Europe will be closed until then.
I am also in a rush to get these out before the long July 4 weekend sucks out what little premium is left in the options market.
Finally, I can use the Currency Shares Euro Trust (FXE) August, 2014 $136-$138 in-the-money bear put spread to hedge my existing position in the (SPY) July $199-$202 bear put spread. US stock market weakness generally triggers a strong dollar and a weak Euro.
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 58 August, 2014 (FXE) $138 puts at?????$3.45
Sell short 58 August, 2014 (FXE) $136 puts at..??.$1.73
Net Cost:??????????????????.....$1.72
Potential Profit: $2.00 - $1.72 = $0.22
(58 X 100 X $0.28) = $1,624 or 1.62% profit for the notional $100,000 portfolio.
