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Tag Archives: eurusd

Update on 2 month EURUSD call option strike 1.2990, BE 1.3175 expiring 21 June 2013

Time for me to do an update on the 2 month EURUSD call option that I  did back on 24 April 2013.  My cost was 185bps and the breakeven was  1.3175, the current spot of 1.2895, appears to be still very far from my  levels.

There is a real possibility that I  may have made a wrong call on this one and then again, I  may not, it’s really hard to say right now.

The tide which was very bullish USD may be turning this week and we might see the return of the bulls for EUR, GBP and AUD.

Mid week is going to be critical, Wednesday is the release of the BOE’s policy minutes, and also Bernanke speak on that day.

Thursday is crucial as fresh numbers on the flash PMIs will be out.

Friday is when Draghi speaks.

My hunch tells me that we will see alot of action and volatility in the latter part of the week, favoring a weaking dollar.

Trade: Short the EURUSD at 1.3200 and squared at 1.3100

Yesterday, was a monumental day as it was the ECB rate decision day.  Lots of media coverage of the event the whole week coming up to Thursday.

It was widely expected that Draghi will cut interest rates by 0.25% and he did, down to 0.50% from 0.75%.

The Euro was extremely volatile and we could not catch the upside, however, instead we positioned ourselves for a reversal and it happened when Draghi hinted that he may do a negative deposit rate if necessary.

We sold the EURUSD at 1.3200 and squared the position at 1.3100, it hit a low of 1.3040, then again, we can’t always catch the top nor catch the bottom.

We made a trading profit of 100bps or 0.75%.

Trade: Short EURUSD at 1.3074 and squared position at 1.2994

At about 8:30pm to 9pm, we started seeing a beautiful technical set up indicated by Ichimoku, fast and slow stochastic s, so we short the EUR at 1.3074.

Later on, we squared the position at 1.2994 for a 80bps trading profit or 0.61%

Update on EURUSD and Trade 2 month call option

The Euro has trended downwards rather nicely.  The current spot of 1.2990 brings to our attention and interesting opportunity.

The lows was established on 13 November 2012 at 1.2698 and again in 2013 on 27 March 2013 t 1.2749.  The high being 1.3709 established on 1 February 2013.

The current spot has not yet retraced the 50% 1.3173 from the November’s lows and barely retracing the 38.2% level of 1.3059, the chart below shows the sensitivity: –

EURUSD with fibronacci taking low of 1.2698 of 13 Nov 2012

And, it’s further away from the 38.2% of 1.3110 and 50% retracement of 1.3212 from the lows of 27 March: –

 

EURUSD with fibronacci taking low of 1.2749_1 feb 2013

The 1 month call option strike at 1.2990 is 132bps or BE of 1.3123 and the 2 month call option is 184bps and BE of 1.3175.  It appears that the 2 month option is more economical and also buys us more time to allow the Euro to recover and build up some steam.

We have executed the 2 month call option: – EURUSD, strike 1.2990, BE 1.3175, expiring 21 June 2013.

 

 

 

 

 

 

 

 

Update on EURUSD 1 month call option @ 12 March 2013 @ BE at 1.3180

Hmmmmm…………..this has been a disappointing trade, we knew back then when we were placing the option trade that the technicals showed a high probability of a breakout based on the bollinger bands, however, we didn’t know which direction it was going to break out on.

Our hunch told us that the crisis in the Euro should settle down for the time being, but the Cyprus issue really knocked down the Euro.

The current spot of 1.2805 is the lowest level for 2013 and way below our breakeven of 1.3180.  It is unlikely that we are going to make any monies from this option and the premium paid of 81bps will be a loss.

This is an excellent example of risk management.  We knew the Euro was going to breakout, but we didn’t know which direction, we made a bet on going long by buying a call option and we were wrong.

However, if we had a done a spot trade, we would be staring at nearly 200bps loss, in this case, we risk managed for a loss of 81bps.

27 March @ EURUSD @ Technical Analysis

Daily chart shows that the lowest point occured on 24 July 2012 at 1.2041 and the recent peak was on 1 February 2013 at 1.3709.

It appears that the Euro is basing or trying to find a base with a possible downside risk.  However, downside risk is mitigated by a rising ichimoku cloud, though the spot rate is currently trading below the cloud.

Trend is also near the bottom band of the bollinger bands.

Hourly chart shows that there is an impending breakout based on the squeezing of the bollinger bands.  Question is when it breaks out, is it going to break upwards or break downwards.  This will depend on the upcoming economic data and the political scene in the Eurozone.  The Cyprus fiasco is by no means the end of the story, the resolution was a stop gap measure to avoid a disaster.

12 March 2013 @ EURUSD 1 month call option

We executed a 1 month call option; strike at 1.3100, spot was 1.3004, breakeven at 1.3181, premium cost was 81bps.