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Tag Archives: call option

8 July @ AUDUSD Call Option expiring 27 November

The outstanding Greece issue, collapse of commodity prices and the collapse of the Shanghai and Shenzhen equity markets was all the right ingredients to push the AUDUSD below 0.7500, then, 0.7400.

RBA Stevens also reiterated in his statement while holding rates at 2% that further weakness in the AUD is expected and necessary because of weak commodity prices.

I have a different opinion and believe that the AUDUSD should be trading at a fair value of about 0.7700.  Australia is not all about commodities, it has a strong agriculture based export industry, including dairy and other foodstuff.  Health products and pharmaceuticals are also significant.  Property market be it supported by Locals or foreigners is buoyant because of cheap mortgage rates.

I see AUDUSD spiking to 0.800 and then coming back down to the 0.7700 range within the next the next 3 months and our option is good for 4 months till end November.

Since the start of 2015, AUDUSD started out the year at about 0.7720 and hit a low of 0.7566 in March/April.  A strong pike to 0.80 happened in late April and a new high for the year at 0.8115 in mid May.  All fundamentals in Australia has been the same for the past 6 months, so will we see the pattern repeat itself?  I believe so.

Spot: 0.7390

Strike: ATM spot

Premium: 200bps

Breakeven: 0.7590

Expiry: 27 November 2015

 

3 month AUDUSD Call Option expiring 29 May 2015

Since I did the trade on Feb 25th, I did not see daylight, till late March when it peaked at 0.7897 and then came off again.

Another opportunity came on April 29th when it hit a high of 0.8063.  You will recall our breakeven was 0.8097 and the premium paid was 97bps.  At that time, I could just square off the trade and made a negligible loss, but I decided to hold on to the position after all, I still have another month to go.  After making the decision to hold off, the AUDUSD started coming off and high a bottom of 0.7811 on May 1st.

An opportunity came on May 13th when the AUDUSD hit 0.8116, I decided to square off the option by selling it. I made a very small profit of 19bps.

In reality after doing the trade in Feb, the onslaught thereafter of negative economic data out of Australia dashed by hopes of it ever recovering.  So, on balance, I am just happy to get out almost breakeven.

It peaked on May 14th at 0.8160 and thereafter, it was a landslide all the way down to the current 0.7689.

Phew!

Update on the 3 month AUDUSD Call Option expiring 29 May 2015

When the dust settled after the rate cut by RBA on February 3rd, and looking at my charts, it seemed at that time a potentially good trade to do the 3 month call option.

If you recall my breakeven is 0.8097, the spot is now 0.7625, so we are more than 400bps+ away from my breakeven.

This is the currency markets for you.

Seems the RBA is more concerned about rejuvenating growth than to tame asset bubbling.

Well, we still have time and who knows anything can happen.  Time is still in my favor.

Bought 3 month AUDUSD call option expiring 29 May 2015

AUDUSD_4H

 

AUDUSD_daily

I am just looking at the AUDUSD and it looks so ripe to do a Long Call Option.

The Daily chart and the 4H chart suggests technically that the AUD has turned from the bottom.  In fact, it is about to cut up on the 200 day average of 0.7898 in the 4H chart.

Therefore, I am confident to buy a 3 month call option strike at 0.8000 with a premium of 97bps, a breakeven of 0.8097 and expiring on 29 May 2015.

Let’s see what happens.

AUDUSD Call Option expiring 16 January

The markets was so volatile, so on Jan 14th at about 9pm, I decided to exit the option at 0.8290 for a trading profit of 105bps (breakeven was 0.8185).

What a great trade for the first trade of the year!

6 Jan @ AUDUSD Call Option expiring 16 Jan

On 6 Jan, my ichimoku and stochastics looked ripe to go long on the AUDUSD and I executed a call option expiring Friday, 16 Jan; strike at 0.8118, premium at 57bps and breakeven at 0.8185.

The following few day, the AUDUSD actually went down to 0.8030 and I thought………..Oh dear my decision was wrong, however, I believe strongly that with the turmoil in Euroland and uncertain disinflation in the UK and hard to believe recovery in the US and crumbling oil prices………….surely everyone would go to the safe haven AUD currency.

Well, the AUDUSD certainly kept me nervous, yesterday it went to a high of 0.8240 before slipping down to 0.8160 on fears of poor employment numbers.

Guess what?  Today, the employment numbers came in very strong at 37,400 jobs versus forecast of 5,300 jobs.  It kept AUD bidded the whole day and then by London open it lost steam again falling back to 0.8165.

Then the SNB announced that they are removing the cap of 1.20 on the EURUSD…………….game over!  AUDUSD shot up to 0.8294, GBPUSD shot up to 1.5266 and USDJPY shot up to 116.25…………..everyone was selling the EURUSD and it crashed down below 1.17 very quickly!

I am getting too old for this rollercoaster ride, then again, it’s fun.

This is my first trade for 2015 and many more to come, so stay tune…………..

By the way, I will be rounding up a performance report for 2014, though I am sure all of you have experienced it yourselves last year; the first half was sleepingly boring and then the second half of the year was ‘rock and roll’.  Nonetheless, because of the difficulty in calling the trades and reading the market, our overall absolute performance for 2014 was much lower than in 2013.  Anyway, will share more information on the numbers shortly.

More importantly, will be writing an article my thoughts for 2015!

13 Aug; 2 week Call Option GBPUSD expiring Aug 29th

After the initial big drop starting at about 6pm Asia time from 1.6830, I decided to do a 2 week call option struck at 1.6735 after almost a 100bps, however, I felt that there was going to be a rebound.

Premum was 56bps and breakeven was 1.6791.

Unfortunately, the GBPUSD continued its slow grind southwards and by the 29th, it was at 1.6585.

So, this call option didn’t work out and we made a loss of 56bps.

14 August; 2 week EURUSD call option struck at 1.3385 expiring Aug 29th

Decided to execute a 2 week call option on the EURUSD with a premium of 49bps as volatility was very low.

Gave myself time for the market to come to me.

On August 27th in Asia session, the EURUSD hit a low of 1.3135, but I held onto the position, by the time the afternoon rolled around, the EUR started picking up momentum.

So I decided to square off the option at 1.3178 for a trading profit of 300bps…………Fantastic!!!!!!

Remember people, options are great in the sense that you would have rationalized taking the loss, that is, the cost of the premium when you execute the trade and that’s your maximum loss, now you have time on your side to make the maximum potential upside.

16 Sep @ 1 month GBPUSD Call Option expiring Oct 15th

Fundamentals and technicals was pointing to a resurgence of the GBP, so I decided to buy a one month call option expiring Oct 15th struck at 1.6160, premium of 118bps, a breakeven of 1.6278.

I squared the position on October 19th at about 5:40pm at 1.6485 for a whopping 2o7bps trading profit.

Ladies and Gentlemen………….this was a super yummy trade!!!!!!

16 Oct @ 1 day call option on the GBPUSD, expiring October 17th

Yesterday afternoon, the GBPUSD looked ripe for a long position, given the previous less than positive US news.  I was betting on alittle more momentum to come through to the GBP since the low of 1.5880 on Oct 15th.

So I executed a 1 day call option at the strike of 1.600, premium of 48bps and squared the position today at 1.6100 for a trading profit of 52bps.