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.
Trade Alert - (FXE)
Sell the Currency Shares Euro Trust (FXE) February, 2015 $122-$124 in-the-money bear put spread at $1.98 or best
Closing Trade
1-8-2014
expiration date: February 20, 2015
Portfolio weighting: 10%
Number of Contracts = 61
There is nothing better than selling short a security and then watching it go into free fall.
At this point we have captured 83% of the potential profit in this trade, so the risk/reward is no longer attractive. There is not point carrying on for another 5 weeks just for a few more basis points.
We have earned a gob smacking 20% on this position is a mere six trading days. Let?s hope we can keep up this pace all year.
Also, in the off chance that we get a black swan out of the blue and a two cent rally in the Euro, I want to have some dry powder with which to resell it.
You can see this put spread anywhere within $1.90-$2.00 range and lock in an outstanding short term profit.
If you own the ProShares Ultra Short Euro ETF (EUO), take profits for the short term, but keep it for the long term. The long march towards parity for the greenback with the Euro continues.
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:
Sell 61 February, 2015 (FXE) $124 puts at??????.?$8.00
Buy to cover short 61 February, 2015 (FXE) $122 puts a?.$6.02
Net Cost:??????????????????.....$1.98
Profit: $1.98 - $1.65 = $0.33
(61 X 100 X $0.33) = $2,013 or 2.01% profit for the notional $100,000 portfolio.
