Skip navigation

Tag Archives: gbpusd

23 June @ Day of Voting for Brexit or Bremain

Decided to take a small punt though I wasn’t exactly comfortable with the volatility.

A two day put option was 120bps, which means for every 1Million nominal option size, the cost is $12,000/-.

Nonetheless, decided to take a small position with the following details: –

2 Day Put Option

Option Amout: $2Million

Strike: 1.4862

Premium: 115bps

Breakeven: 1.4747

It’s gone crazy now!!!!

About half of the results are in and Leave leads by 3.5%, GBP plummets.

I decided to take profit on my option and sold the option five minutes ago at 1.3490 for a whopping 1,257bps or a payout ratio of 10.4:1!!!!!

I am out for the rest of the day! Thank you UK!

GBPUSD in April

The story of Brexit has dominated the GBP pretty much the entire month of April.

It started at about 1.4272 on April 1st, hit a low of 1.4019 on April 6th and 7th and from there it established four highs topping at 1.4632 on April 26th.

1H + Fibo suggest that spot is trading at the 100% level

4H + Fibo suggets that spot is trading at 50% level

Any negative surprise to the GDP data will surely see GBP crashing! Wall Street is expecting a range between 0.4% to 0.5% with general consensus at 0.4%.

Let’s see.  Let’s all be there to capture any potential opportunity if it presents itself.

We did well this morning with the AUD CPI, will out positive momentum continue this afternoon in the UK trading session?!

Quick Update on the Put Options…………

Ok, it looks like my call was wrong.

Profited from the GBP because the put level was on the higher range.  In hindsight, the levels of the AUD, EUR and JPY were all kind of the mid range between the high and low goal posts.

Today’s Australia CPI was negative, indicating that the Aussie economy has gone into deflation the past quarter. This was good for my spot trade which I will share in another write up and makes my put option look alittle better but honestly, the I doubt the AUD level will be hit before the end of this month, only two more days.

Looks like I may be throwing away the options paid for the AUD, JPY and the EUR, then again, if I did a mark to market, then, I lost less doing the options then continuing the hold say an ‘open’ spot position, which would have necessitated a top up by now.

So, as I have always shared with all of you, if you have a fundamental view of a strategic view, then, play the potential opportunity by way of an option, rather than doing a spot transaction.

Sold off some options before expiry…….

The FX markets has proven to be most unpredictable.  On the March 22nd, I felt strongly that the USD was oversold and the charts seem to indicate it, however, after Yellen’s speech at the NY Economic Club, the USD was killed.

All the majors rallied against the USD and in fact, made new highs for 2016.  This was more disheartening, however, I was fortunate in that I played the potential opportunity while waiting for the market to come to me by way of options.  Therefore, I have accepted my absolute losses which was the premiums I paid for the options upfront.

I have been hearing from the banks and on the ground that many FX clients have been caught on the wrong foot.  Worse still though the USD has made back some gains, the JPY went against the rest of the majors by strengthening against the USD.  Can you imagine that the JPY has moved 5 big figures since the last week of March?!

Anyway, when I started seeing the USD gain back ground against the majors I decided to sell of two of my outstanding options; the GBPUSD Put Option and the AUDUSD Call Option.

On April 6th after London opened, the GBP was aggressive sold off, I decided not to wait again like I did two weeks and so decided to sell the put option at 1.4030 for a trading profit of 252bps (breakeven was 1.4282), option originally expiring on April 29th.

On March 31st after NY opened, the AUD continued climbing up against the USD, I put in an order to sell the call option at 0.7700 and it got triggered, locking in a trading profit of 280bps, call option had an expiry date of July 9th.

While the trades turned out in my favor it was not without days and weeks of disbelief that my call was potentially wrong, but instead of waiting closer to expiry, I decided not to star a gift horse n the face, so take profit on the options.

As you can see, the risk reward ratio wasn’t great, on average about 1:1.  A better trade would be 2:1 or higher.  Anyway, I am just glad to be out.

Now I still have three outstanding put options; EURUSD, USDJPY and AUDUSD which are not in the money and we are going into the second week of April.  I have some time left and let’s hope the market moves in my favor.

 

Putting my money where my mouth is…..?!

On Monday morning, I looked at the charts of the 4 majors and noticed that late US session on Friday, the USD was starting to claw back some ground.

I felt strongly that my hunch of a USD reversal is on the cards!

So I decided to get pricing to buy ATM put options expiring 29 April 2016 with the following details: –

EURUSD   –   Spot 1.1253, Premium 140bps, B/E 1.1113

GBPUSD   –   Spot 1.1253, Premium 180bps, B/E 1.1.4282

USDJPY   –   Spot 111.47, Premium 1.27bps, B/E 112.74

AUDUSD   –   Spot 0.7596, Premium 106bps, B/E 0.7490

I decided to execute all 4 put options with notional amounts of US$100Mn each.

It’s 6:38pm on Tuesday evening and where is the spot rate for the majors?  Well, it’s: –

EURUSD  –  1.1211

GBPUSD  –  1.4276

USDJPY  –  111.62

AUDUSD  –  0.7592

Looks like I am also breakeven on my GBP, a little ways for the rest, however, as I mentioned earlier, I feel strong that there will be a USD reversal within the next 30 days.

I mean look at how the majors moved against the USD at FOMC and more so post FOMC, on average about 400bps moves against the USD.

I don’t believe for a moment that these counties can survive on such strong currency valuations when their respective economies are anemic.

Ok, fingers crossed and toes crossed!!!

Good luck in your trading.

USD Reversal???

Since last Friday, the back of my neck was feeling itchy and I couldn’t thinking that the USD was oversold after the FOMC.

I decided to look at the 4H charts on the GBP, EUR, JPY and AUD and here they are: –

4H_usdjpy

4H_eurusd

4H_audusd

From a technical point of view, isn’t a USD reversal a high probability???

Janet Yellen’s speech and Q&A did not warrant such a strong sell down in the USD, this is my personal opinion.

I am looking at buying put options against the majors till maybe end of April, will have to check the premiums to ascertain whether it’s expensive or not.

The saga continues……………..

FOMC; GBPUSD

I also put in a trade for the GBPUSD with the following details: –

GBPUSD   –   Stop if Offered at 1.4080 with SL at 1.4110, Spot at 1.4121, Stop if Bid at 1.4150 with SL at 1.4130

When the GBPUSD launched to the sky, it triggered my 1.4150 trade.

I squared it at 1.4236 for a trading profit of 115bps.  Including the 44bps from the EURUSD, FOMC allowed me to make a total trading profit of 159bps.

Thank you.

Time to try and sleep now.

D-Day; Friday, 26 February; Prelim GDP!

The market was so quiet all week except for Wednesday’s drop in the afternoon or London opening, no significant data or was it because of the fall in the Shanghai equity market?

Anyway, I had a hunch market needed to go back to rational volatility where market responds accordingly to strong or weak data, minus all the noise from politicians and central bankers.

I figured US Prelim GDP was going to be a market mover. So at 9:25pm, I did the following trades: –

EURUSD  –  Call Option expiring 29 February, spot 1.1017, premium 37bps, BE 1.0975.

GBPUSD  –  Stop If Offered; 1.3955, SL 1.3975 with Spot at 1.3984 and Stop if Bid; 1.4015, SL 1.3990

When the Prelim GDP data came out much stronger at 1% q/q versus expectation of 0.4%, the market went wild.

I squared off the GBPUSD at 1.3909 at about 11pm for a trading profit of 66bps.

I squared off the EURUSD this morning Aussie session at 1.0920 for a trading profit of 55bps.

121bps for the one and only trade in February, not bad!

February was truly a frustrating month where irrational volatility dominated the financial markets.  It all started in early February during Chinese New Year celebrations in Asia; oil prices fell again, Shanghai market fell again, negative interest rate announced by BOJ.  Then, later in the month was the UK and fraternizing with Brexit.  Strong US data and USD weakens, weak Euro data and EUR strengthens…………absolutely crazy!

All in all, I put in 5 other trades during the month of February but because the market was irrationally crazy, I pulled out the orders each time I went in.

So I am so happy that I finally have a reprieve on Friday, February 26th to make a killing!!!

 

28 January 2016; UK preliminary GDP

As the preliminary GDP for UK is a data that the market is focusing on, I decided to place my straddle at 5:27pm with the following details: –

GBPUSD: –

Sell, Stop if Offered 1.4220, SL 1.4240

Buy Stop if Bid 1.4270, SL 1.4250

Spot: 1.4251

As it turned out, the preliminary GDP came in on the spot at 0.5% in line with forecast.

GBP moved upwards positively but somewhat muted, it triggered my trade at 1.5270 and I squared the trade at 1.4292 for a trading profit of 22bps.

Ok lah……………

14 Jan @ BOE Rate Decision………….any surprises?!

The media buzz seems subdued going into the BOE rate decision at 8pm Asia time.

However, I decided to put a Long, Stop if Bid OTM just because……………

At 7:58pm; Spot 1.4388, Long Stop if Bid 1.4420, SL 1.4400

As it turned out, BOE decided not to rock the boat; rate same same at 0.50%, purchase facility at GBP375Mn…….both no change.

Policy statement, tilted slightly to the dovish side.

GBP hardly moved, so I decided to take out the trade.

It’s now 8:45pm and GBPUSD is trading at 1.4392………………..boring!

Looks like no more opportunities for the rest of the week.

I am going to spend Friday with my parents; lunch with my Dad and shopping and tea with my Mum.

Here’s wishing all a good weekend and let’s all get charged up for next week.