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Monthly Archives: February 2018

Gong Xi Fa Cai to one and all………..

Here’s wishing one and all a prosperous and happy 2018.

The Year of the Dog will probably bring more positives than negatives………….like the Dog we should all be positive, happy, hardworking, playful and loving throughout the year.

Geo-political issues will continue to evolve, however, there is sufficient rational and mature politicians to manage the likes of Trump and Kim Jong-un.

Global economies will the front and centre, as more and more economies have to begin grappling with the issue of monetary tightening.  What is that going to do to their respective economies?  What will that mean for trading countries? How will the balance of trade and balance of payments pan out? Which currency will be stronger and which currency will be weaker this year?

Gold holding at US$1,333 is indicative of the tension amongst countries with geo-political issues, namely, the USA with the rest of the world, thanks to Humpty Dumpty Trumpy…………….making a mess! It also signifies that global economies could very well turn back south is the moderate growth is not managed well.

The dialing back of both monetary and fiscal policies must be done gradually in order not to shock the economy and also the financial markets.

The recent diarrhoea in the USA equity markets is testament that there isn’t sufficient fundamentals to support the runaway equity market.

I am excited at the prospects for trading this year, are all of you?

Let’s continue to keep up the dialogue and communication, you can reach me at twitter and here.

Here is wishing all of us a great 2018!!!

 

25 January 2018 @ Bought three options………..

After the majors ripped through the USD for a better part of January, I decided that it was about time the USD was oversold or too far beaten up, that it will shortly be time for a reversal.

I decided to buy three options as follows: –

USDJPY @ Call option expiring Friday, 2 March; strike at 108.83, premium at 1.10 and breakeven at 109.93

GBPUSD @ Put option expiring Friday, 2 March; strike 1.4313, premium of 150bps and breakeven at 1.4163

AUDUSD @ Put option expiring 16 February; strike 0.8113, premium of 72bps and breakeven at 0.8041

 

I sold off the GBPUSD put option at 1.3990 for a trading profit of 173bps.

I sold off the AUDUSD put option at 0.7790 for a trading profit of 251bps.

My USDJPY option is in trouble with spot at 107.15, the option may expire in early March worthless.  In any case, at the time when I bought the option I was prepared to part with the option monies, so it’s ok.

More importantly, these three option trades clearly demonstrate that we can’t win all the time.  What’s important is to follow and study the market, put our mark on it and wait for the market to come to us, however, we should always manage the risk parameters, if we don’t, chances of losing monies is imminent.

Now, I need to think about doing the reverse in the USDJPY, what do the rest of you think?