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Tag Archives: forex

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.

Fed D Day

I really did not know which way the market is going to move but there was enough buzz in the markeplace to generate sufficient volatility to do my straddle.

At about 1:56am Singapore time I decided to place two straddle trades with the following details: –

EURUSD; Stop if Offered 1.0600, Spot at 1.0630, Stop if Bid 1.0660

USDJPY; Stop if Offered 114.23, Spot 114.53, Stop if Bid 114.83

All SLs at 30bps away.

I decided to square the USDJPY 3 minutes after the announcement at 113.70 and the EURUSD 5 minutes later at 1.0690.

Trading profit of the USDJPY was 0.53yen and EURUSD 30bps.

Not too bad, was hoping for a bigger move, then again, we should be thankful for good and safe trading profits.

 

2016 Absolute Performance

2016 was clearly an interesting year for all traders; Russia, China, Brexit and the US elections.  It certainly provided us with alot of volatility, however, what was difficult at times was that the volatility was irrational and we couldn’t make sense of it.

The year was driven by what central bankers were saying, politicians sparring and the rise of populism.

We executed a total number of 56 trades and withdrew 22 trades.

We now have an audited absolute return of 117.28%.  Although, it is significantly lower than the 178% we achieved in 2015, we are still higher than our long term absolute return objective of 88%.

13 Feb 2017;squared USDJPY call option

I decided not to exit the call option on Friday thinking that it would go higher, but by the time I came back from a late dinner, USDJPY had come back down from 113.70 to about 113.30.

I decided to place a take profit level at 114.00 just in case it bounced back up on Monday morning during Aussie early session.

When I woke up this morning to cook breakfast for my wife, I didn’t pay any attention to the FX rates, but later on, I received an sms from Goldman Sachs informing me that my take profit level was hit at 114.00, in fact, the high was 114.13.

The call option was sold at 114.00 and the resulting trading profit was 0.95yen……not bad!

Now, I still have another outstanding USDJPY call option, however, I have time till mid March.

1 Feb 2017; UK Mfg PMI

Ever since, Brexit has been looming over the UK, all data attributed to manufacturing and services has been on the radar screen.

This evening was the UK Mfg PMI.  I didn’t really know which way it was going to swing, but I could sense that it would be a weaker data, so I placed a one leg straddle with the following details: –

Stop if Offered at 1.2566, SL at 1.2586 and Spot at 1.2589.

The data came our flat at 55.9 same as forecast, GBPUSD hardly moved, so I withdrew the straddle trade.