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Monthly Archives: April 2017

ECB Rate Decision……..TONIGHT!

I believe Draghi is going to starting reining in QE as he kind of hinted in his last press conference.

However, because of the Brexit, French elections, Greece and Italy, I can’t help thinking that he might end up also being alittle dovish.

So in truth, I believe he can go either way, but the volatility on the upside seem to be higher than the down side.

I decided to execute a double down call and put option spread with the following details: –

Spot; 1.0905

Call option; BE; 1.0948 with 43bps premium

Put Option; BE; 1.0879 with 26 bps premium

Total premiums; 69bps.

Let’s see what happens. I believe whatever happens tonight will translate into market action over the next few days.

It doesn’t help that it’s a long weekend upcoming up.

 

7 April; GBPUSD @ Manufacturing Production, Industrial Production, Construction Output, Trade Balance

Given UK’s preoccupation with the Brexit and firms pulling out, I felt that the manufacturing numbers were probably going to be weak.

So decided to put in my GBPUSD straddle with the following details: –

Stop If Offered at 1.2440, Spoat at 1.2460, Stop if Bid at 1.2480

All the data came out weak, and it triggered by Stop if Offered leg, but for some reason the GBP seemed resilient, so I decided to square the position at 1.2400 for a trading profit of 40bps.

5 April; GBPUSD @ Services PMI

UK Services PMI will always be a much looked at data given the services economy that is the UK.

I decided to put in my GBPUSD straddle with the following detail: –

Stop if Offered at 1.2444, Spot at 1.2474, Stop if Bid at 1.2474

Though the PMI came out strong at 55 versus forecast of 53.5, the GBP just didn’t make much of a move, it did trigger my stop if bid leg.

I squared the position at 1.2492 for a small trading profit of 18bps.

 

18 April; Theresa May……….FRONT AND CENTRE

One of the more significant speeches to be made by Theresa May after triggering Article 50.

So I decided to place a straddle just before the speech with the following details: –

Stop If Offered at 1.2538, Spot at 1.2568, Stop if Bid at 1.2590

After Theresa May announced a possible snap election in June, the GBPUSD started getting bidded.

I followed the spot trade till about 9:25pm and decided to square the position at 1.2725 (high was 1.2745) for a trading profit of 135bps.

Thank you Theresa!!!

 

17 April; two straddles

Yesterday, thought the NY Empire State Manufacturing PMI would be a volatile event.

So, placed two straddles; one EURUSD and the other USDJPY.

Unfortunately, despite the weak data, EUR and JPY hardly moved. I believed the world is on edge about the tension between North Korea and the USA.

So I withdrew both the straddle trades.

13 April; Bought 1 month GBPUSD Put Option and USDJPY Call Option both expiring 15 May

Volatility is low, so it’s increasingly more difficult to do intra day spot trades.

I felt the timing was more appropriate for options so decided to execute the following options: –

1 Month GBPUSD Put Option – Strike at Spot 1.2565, premium at 129bps and BE at 1.2436

1 Month USDJPY Call Option – Strike at Spot 108.85, premium at 1.43yen and BE at 110.29

Let’s see what happens.

20 March; thoughts on GBPUSD

Was trying to get a feel for the range of the GBPUSD.

The 4H  –  High 1.3441, Low 1.2022, spot at about 23.8% retracement level

1H   –   HIgh 1.2560, Low 1.2119, spot just above 61.8% retracement level

It suggests that if there is positive news coming out of the UK that the 1H could breakout and then the 4H begins to be relevant.

Have to keep watching……………….