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Wow……….wow…………wow………..the EUR and GBP collapsed!

I squared the two put options; one on the EURUSD and the other on the GBPUSD as follows: –

GBPUSD; BE 1.6107 and sold the option at 1.5966 for a trading profit of 144bps

EURUSD; BE 1.3713 and sold the option at 1.3518 for a trading profit of 196bps

I must confess that was really a lucky trade.  I did these two short dated option trades because I was only comfortable to give up so much for the premiums just in case I was totally wrong.

The ADP came out weak, Chicago PMI came out strong, Bernanke was neutral, I also truly couldn’t explain the big drop in the majors except to say that I was lucky.

These two trades were totally predicated on looking at technicals; Ichimoku, Stochastics and Bollinger bands, it all pointed to a oversold USD.  More importantly, I was prepared to gamble away the option premiums, however, I reduced my exposure to the premiums by shortening my tenor and also reducing the nominal trade size.

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