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 - (FXE) - EXPIRATION
EXPIRATION of the Currency Shares Euro Trust (FXE) March, 2018 $120-$123 in-the-money vertical BEAR PUT spread at $3.00
Position Closed-NOT FOR NEW SUBSCRIBERS
3-16-2018
expiration date: March 16, 2018
Portfolio weighting: 10%
Number of Contracts = 40 contracts
My bet that the Euro put in a triple top at the $120.60 level proved dead on correct.
This was a bet that the Currency Shares Euro Trust (FXE) would trade below $120 by the March 16 options expiration in 18 trading days.
As long as the foreign exchange market focus is on rising interest rates, the US dollar will hold its own against the Euro. The Fed will most likely raise interest rates on Wednesday by 25 basis points.
You see, there is a method to my madness!
As it turned out, the (FXE) closed at $118.17.
By running this position into expiration you managed to clock a robust 20% profit in only 18 trading days.
You don't need to do anything to close this position. That should happen automatically on Monday morning and the profit credited to your account. The margin it occupied will be freed up.
If you sold short the (FXE) outright I would take profits here. Exploding US deficits will likely take the dollar lower over the medium term.
A nice tailwind for this position was the fact that the US Treasury bond market (TLT) virtually didn't move AT ALL during the life of this trade. The failure of rates to fall cut the legs out of the entire weak dollar play, at least for the short term.
We were also helped in this trade in that Euro futures long positions held by institutions are at an all-time high (see chart below). Once we break technical support, you could really see a major melt down.
Here are the specific trades you need to close this position:
Expiration of 40 March 2018 (FXE) $123 puts at............$4.83
Expiration of short 40 March 2018 (FXE) $120 puts at......$1.83
Net Proceeds:....................................................................$3.00
Potential Profit: $3.00 - $2.50 = $0.50
(40 X 100 X $0.50) = $2,000 or 20.00% in 18 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.
You must be logged into your account to view the video.
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.
Be sure you've signed up for our FREE text alert service. When seconds count, this feature offers a trading advantage. In today's market, investors need every advantage they can get.
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.
