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) – TAKE PROFITS
SELL the Invesco Currency Shares Australian Dollar Trust (FXA) August 2019 $67-$69 in-the-money vertical BULL CALL spread at $1.98 or best
Closing Trade
7-22-2019
expiration date: August 16, 2019
Portfolio weighting: 10%
Number of Contracts = 56 contracts
Since we bought the Australian dollar a week ago, it has broken through the top end of its recent trading range. It seems that the world is finally coming around to my way of thinking about the Aussie.
As a result, we have already made 90% of the maximum potential profit in this position. The risk/reward of continuing is no longer favorable. Better to have cash you can strap this baby back on during a temporary pull backs.
Besides, I really like making a 10% profit in a week, or $1,008, or those who took on my recommended $10,000 position. If you are still trading on paper, only count this one as a big win.
I am therefore taking profits on my position in the Invesco Currency Shares Australian Dollars Trust (FXA) August 2019 $67-$69 in-the-money vertical BULL CALL spread at $1.98 or best.
The Aussie is pretty illiquid during US trading hours. So, if you can’t get my price today, put the same order back on until it gets filled. If you are in a hurry to get filled, you might lower your offer to $1.95 and still make 75% of the maximum potential gain.
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.
This was a bet that (FXA) shares would not fall below the $69.00 strike price by the August 16 options expiration date in 24 days.
If you bought the Australian dollar futures, ETF, or currency outright, keep it. (FXA) has a lot more to rise from here, eventually to parity.
I picked the Aussie to go long 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:
Sell 56 August 2019 (FXA) $67 calls at…………......………$4.90
Buy to cover short 56 August 2019 (FXA) $69 calls at….$2.92
Net Proceeds:………………..…….………..……......................$1.98
Profit: $1.98 - $1.80 = $0.18
(56 X 100 X $0.18) = $1,008 or 10% in 5 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.
