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.
The Panthenon Investment Group 