I decided yesterday to buy a put option on the USDJPY with the following details: –
Strike: 111.13
Premium: 1.91
Breakeven: 109.22
Expiry: 10 August 2018
Felt that the USDJPY was overbought and that a retracement was due, more importantly, the 10 year treasury also signalled a possible retracement since it has a positive correlation with the USD.
This morning Asia time I decided to take profit on both the options with the following details: –
AUDUSD; sold at 0.7550, locking in a trading profit of 122bps.
USDJPY; sold at 109.20, lock in a trading profit of 0.76yen.
Not bad for a short trade!
Let’s see if we can identify another trade in the near future.
On April 20th, I felt that the AUDUSD was peakish from a technical viewpoint. More importantly, was the recent media releases about the health of the banks and the fact that the property market in Australia is starting to slide.
I decided to take the opportunity to do a 2 week put option expiring on May 4th with the following details: –
Strike; 0.7722, Premium; 50bps, Breakeven; 0.7672
Let’s see.
After the majors ripped through the USD for a better part of January, I decided that it was about time the USD was oversold or too far beaten up, that it will shortly be time for a reversal.
I decided to buy three options as follows: –
USDJPY @ Call option expiring Friday, 2 March; strike at 108.83, premium at 1.10 and breakeven at 109.93
GBPUSD @ Put option expiring Friday, 2 March; strike 1.4313, premium of 150bps and breakeven at 1.4163
AUDUSD @ Put option expiring 16 February; strike 0.8113, premium of 72bps and breakeven at 0.8041
I sold off the GBPUSD put option at 1.3990 for a trading profit of 173bps.
I sold off the AUDUSD put option at 0.7790 for a trading profit of 251bps.
My USDJPY option is in trouble with spot at 107.15, the option may expire in early March worthless. In any case, at the time when I bought the option I was prepared to part with the option monies, so it’s ok.
More importantly, these three option trades clearly demonstrate that we can’t win all the time. What’s important is to follow and study the market, put our mark on it and wait for the market to come to us, however, we should always manage the risk parameters, if we don’t, chances of losing monies is imminent.
Now, I need to think about doing the reverse in the USDJPY, what do the rest of you think?
As it turned out, this was a classic case of buy on the rumor and sell on the fact.
When BOE announced the hike, plus the votes and keeping asset purchase flat, the GBPUSD went on a meltdown.
I took profit at 1.3120 for a trading profit of 115bps.
Many thanks BOE and GBPUSD!
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.
The USA had two good days; good ISM manufacturing PMIs, good ADP non farm payrolls, good ISM non manufacturing PMIs………..kept the USD bidded against all majors.
Although, my put options are only expiring tomorrow and we have the non farm payrolls which could be stronger or weaker than the ADP, I am not confident in taking the risk exposure going into the last day of my option.
So I decided to take what the market could give me now and sold off both the put options at 1.3180 for a trading profit of 80bps. Not bad lah…………1:1 payout ratio, was hoping for more…………….however, never stare Lady Luck in the face.
So, gladly I am out of all four put options without any BLOOD! Sold of the first two at breakeven level and the last two for a profit.
Yesterday, I decided to reduce my risk exposure by selling two of the put options at 1.3230 for a small trading profit of 30bps.
I am still holding two more put options and hopefully, we will see a further downside to the GBPUSD.
Right now, it’s attemtpting to cross the 200DMA @ 4H chart at 1.3201 from the top, if it does, then, we should see a collapse in the GBPUSD, unfortunately, will my put option have enough time???
Spot currently at 112.71.
Looks like my put option expiring tomorrow will expire worthless and will take a hit of 1.03yen, the cost of the option.
Oh well, we win some and we lose some…………that is FX trading………….
The GBPUSD is going crazy, it’s now at 1.3530!!!!!!!!!!!!
I don’t believe in the strength of the GBPUSD, so I am buying another GBPUSD put option with the following details:-
Expiry date: Friday, Oct 6th
Strike at spot: 1.3530
Premium: 110bps
Breakeven: 1.3420
My average breakeven for 4 put options is now: 1.3260.
Let’s see!!!!
I am born in the Year of the Tiger.
The Panthenon Investment Group 