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Tag Archives: Carney

You know the classic story when they say buy on rumors and sell on fact.

Well, I felt that the GBPUSD kind of overshot, so I decided to gamble alittle by buying a small position by way of a put option for one day expiring on Friday, Nov 3rd with the following details: –

Strike at Spot: 1.3290

Premium: 55bps

Breakeven: 1.3235

Let’s see.

Market had almost priced in an interest rate cut of at least 0.25% some even speculating 0.50%.  However, the sensible cut would be 0.25% and the BOE did not disappoint.

Market was really waiting for whether or not the BOE will announce a larger asset purchase amount to pump more liquidity into the economy post Brexit to help boost the economy.

I decided to place a one leg straddle with the following details: –

GBPUSD:   Stop if Offered at 1.3300, Spot at 1.3325 and SL at 1.3330

As it turned out the interest rate cut didn’t really move the market, but what cause the floor from under the GBP to collapse was the announcement of an increase of 60Bn to the asset purchase program totaling 435Bn (previously, 375Bn).

My trade was triggered at within 5 minutes the GBPUSD was at 1.3172, I squared the position at 1.3185 for a trading profit of 115bps.  Thank you BOE, thank you Carney.

Ok another central bank’s turn to create volatility in the marketplace.  BOE this week was squarely in the middle of the radar screen and of course, we should try and capture the volatility if it happens.

At about 7:54pm, I decided to place my straddle trade with the following details: –

GBPUSD   –   1.5365   –   1.5385   –   1.5405  with spot at 1.5385 and stop losses at 1.5385

When decision came out to hold and inflation targets to be adjusted, the GBP collapsed to 1.5270, triggering my stop if offered at 1.5365.

I decided to hold the position till after the start of the press conference.  Initially at the start of the press conference the GBP began climbing back up to 1.53295 and I thought maybe, I should square of the trade now and preserve my profits.

Then, with more comments from Carney talking about the fact that raising interest rates will be much further out in the horizon, the GBP went south again, and I decided to square off the trade at 1.5255.

Trading profits is 110bps……….RIGHT ON CARNEY!

Now to look forward to US unemployment claims in the next few minutes.