FXE trade ideas
OPENING: FXE JUNE 16TH 102/103/105/107 IRON CONDORBasically, a synthetic short FXE position with some put side flexibility in the event that I am totally wrong ... .
Metrics:
POP%: 46%
Max Profit: $95/contract
Max Loss/BPE: $105/contract
BE's at 102.04/105.96
Theta: .38
Delta: -22
Notes: Shooting for 50% max ... .
FXEi see a new low on FXE that follows EURUSD. On weekly we have a bearish breakout with a possible retracement going on. I see a retracement up to falling window at 118 level. Possible completion of Bearish cyper. But deff a chart to keep a eye on throughout this year. and next Keep on radar.
1.618 extension will move to 93 level. 2.618 extension could bring to 83 level.
THE WEEK AHEAD: FXE OR /E6, P, NVDA, AND MWith the French elections now in the rear-view mirror, the Euro is at 1.10-ish at Asian open, and I'm looking to watch and short /E6 or FXE after seeing how far the spot forex pair goes here. Typically, the currency doesn't move all that much in the Asian session, so I kind of want to see what the European market does with the news before committing to a short position, which is likely to be a straightforward short call vertical, although some tweaking to the strikes being used will be necessary now that it's at 1.10-ish. (See Post Below).
Aside from that, we've got some quality earnings plays coming up this week, a few with the metrics that meet or almost meet my "smell test" (>70% implied volatility rank, >50% implied volatility).
P (80/68) -- announces on Monday after market close, so look to put on a play before the NY market shutters. Due to the size of the underlying, only a short straddle or defined risk iron fly makes any sense here for a nondirectional play.
NVDA (72/50) -- announces on Tuesday after market close. Short strangle or iron condor are the suggested plays with potential tweaks aimed toward limiting downside risk (e.g., Reverse Jade Lizard) so you don't get AMD'd if that's the way this cookie crumbles.
M (85/45) -- announces on Thursday before market open. At $29/share, this one's a kind of "in-betweener" -- you can go short strangle/iron condor if it pays enough or agress with a short straddle/iron fly if you want the allure of more credit at the door and the option to take profit at a lower max profit percentage. Of course, it's brick and mortar retail, which as a sector has seen individual name mixed results over the past several earnings cycles (being generous here), so my tendency would be to keep setup POP% high as a trade off against bringing in more in credit to give you greater flexibility dealing with a broken setup post earnings than a short straddle or iron fly would.
I'll post more concrete setups should I decide to dip my toe into one or more of these ... .
FXE: TWO BEARISH OPTIONS SETUPSFXE JUNE 16TH 105/108 SHORT CALL VERTICAL
The first of the two setups is a "static" short call vertical with a break even around 106 resistance.
Metrics:
Probability of Profit: 58%
Max Profit: $120/contract
Max Loss: $180/contract
BE: 106.20
Notes: Look to manage at 50% profit.
FXE JUNE 16TH 107 SHORT CALL/SEPT 15TH 110 LONG CALL DIAGONAL
This particular setup gives you some more flexibility in the event we do get some bullish movement in the short term, since you have opportunities to roll the short call for duration and credit during the life of the setup. Unfortunately, the vast majority of metrics for a diagonal are indeterminable from the outset, although the short call here, standing alone, has a probability of profit of 67%. This gives you a fairly high probability that you can completely finance the cost of the long in short order.
Metrics:
POP%: --
Max Profit: --
Max Loss/Buying Power Effect: $293/contract
Notes: Look to roll the short call out for duration when it approaches 50% max profit to the next expiry in which you can receive credit for the roll.
FXE last callIt seems we are about to ride the best wave (3 of 5); eurusd at market a nice sell opportunity for a new low, close to 1.01-1.02...imo
TRADE IDEA: FXE JUNE 16TH 105/108 (?) SHORT CALL VERTICALPost-French elections, the fairly obvious thing to do is to think about shorting the Euro here or its proxy, FXE.
Unfortunately, we don't know exactly where FXE will open, but if the EURUSD chart is any indication, it will be in the vicinity of previous resistance at 105-ish. Similarly, we don't know exactly what this spread will price at, so I can't provide the metrics here until NY opens ... .
Big Lizard on FXEWith IV rank at over 46 on FXE, the expected move in 46 days is +/- 2.61 (Prices at 106.01-100.79). If I sell a Big lizard, my break even on the downside would be just below the expected move and we don't have risk to the upside (In case it wants to pull back to the 200 EMA).
Sold the 103 Straddle with upside protection buying the 105 call with 46 days to expiration on FXE.
The trade:
Short 103 Call
Short 103 Put
Long 105 Call
Credit $2.25
Break Even at 100.75
74% probability of profit
ATM Ratio spread on FXEWith the IV rank above 50 on FXE its a good time to sell premium. I could do a Strangle or Straddle, but since we are at an extreme and very far from the 200 EMA I don't want the risk to the upside. So I will be making a at the money Put ratio spread. Selling 2 of the 102 Puts to finance one of the 104 Puts. This way we have a 69.5% chance to make money at expiration with no risk to the upside. If we manage early we can bump it up to around 90%.
Max Profit $227 per contract, will look close at 25% of credit received.
We make money as long as we stay above 99.73 in the next 44 days.
the last assault?FXE might go up pretty soon and finish this last leg... eurusd usually is a 150-200 pips a week roughly, current week 105 pips, so it is very possible we see this last move upwards
gl & gt
FXE mode cautiousLet´s notice the shooting star in formation, so be cautious with long positions...it could send eurusd below 1.07...gl & gt
FXE a very quickly trade?If these waves are correct, we expect a short lived move to the upside and once the small gap is filled, we will short it
FXE Iron Fly v2Back to the well in the Euro since Vol is pretty low all over the place. This will extend my break evens as well on the entire position.
Trade Setup:
-1 FXE Mar 17 100/102/102/104 Iron Fly @ 1.32
DTE: 23
Max Win: $132
Max Loss: $68
Breakevens: 101.68 & 103.32
Trade Management: 25% Winner (~$33); Full loser or will roll out ITM/tested side if on the dance floor.
Green is profit zone; vertical is expiration.
FXE Iron FlyJust looking for some premium around the market on these up days. Found an "okay" IV in FXE.
Trade setup:
- 1 FXE Mar 17 101/103/103/105 Iron Fly @ 1.37
DTE: 32
Max Win: $137
Max Loss: $63
Trade Management: 25% Winner or ~ $35; Full loser or will roll out ITM/tested side if on the dance floor.
Green is profit zone and vertical black line represents expiration.
OPENING: FXE JAN 27TH 97/101/101/105 IRON FLY... for a 2.25 credit.
Although general background IV in FXE isn't high here (it rarely is, comparatively speaking), it's high relative to where it's been in the last six months.
Metrics:
Max Profit: $225
Max Loss/Buying Power Effect: $175
BE's at 98.75/103.25
Notes: Will look to manage at 25% max profit. Just trying to keep the theta coming in here with what limited high IVR choices I have available to me.
FXE / Euro Dollar - Possible breakoutAnother breakout is possible for the euro dollar FXE.
See the full newsletter here: forum.marketstockoptions.com
TRADING IDEA: FXE JULY 15TH "SUPER BEAR"There are basically two variations on a "Super Bear," the first uses a short call to finance a long put debit spread, the other uses a short call credit spread to do the same thing, the difference being that a naked call Super Bear is an undefined risk trade, while a call spread Super Bear is defined. In this particular case, in order to be capital efficient, I'm opting for trying to get a fill on a "Call Spread Super Bear." I'm doing this instead of just a short call credit spread due to its enhanced return on capital characteristics and FXE's historical habit of breaking down to 106; this setup will allow me to get the "boom" out of the short call spread, as well as the "kapow" out of the long put debit spread.
Here are the metrics:
Probability of Profit: 35%
Max Profit: $413/contract
Max Loss/Buying Power Effect: $387/contract
Break Even: 112.13
In this particular case, you actually receive a small credit for the setup ($13 at the mid price).
Notes: Here, the probability of profit is somewhat horrid. However, in this particular case, I take it with a grain of salt, since I not only have a firm directional bias in FXE/EURUSD, I regard the 112 to 112.50 area in FXE (comparable to 1.1450-1.500 in EURUSD) as long-term resistance from which it has repeatedly retreated. That being said, in the event I am "somewhat wrong" as to my timing, I'm opting to go farther out in time to give the trade time to develop and to envelope not only the Brexit vote, but also a possible FOMC June rate hike, which will strengthen the dollar and cause EURUSD and FXE to fall.
The ideal outcome is for price to finish below the 108 short put at expiry, but I would look to take the entire setup off as a unit for some significant percentage of max profit ... . Naturally, it is also possible to strip off the debit spread (assuming it moves into profit on a break of the 108 short put) first, allowing the short call credit spread to expire worthless if that scenario comes to fruition prior to expiry.
WHAT I'M LOOKING AT NEXT WEEK: MON, EWZ, VIX PRODUCTS, FXEWith VIX at sub-14 levels and without much on the earnings calendar that is ideally playable with options from a premium selling standpoint, next week is likely to be a schnooze in the absence of a broad market volatility pop.
Nevertheless, there are a couple of plays I might consider.
MON: MON announces earnings on April 6th before market open. With an implied volatility rank of 58 and implied volatility of 32, it's not looking all that sexy for premium selling at the moment, with the preferred rank/IV metrics being >70 and >50, respectively. Nevertheless, the run-of-the-mill short strangle is offering up more than 1.00 credit ($100)/contract in premium at the moment, so it might be a worthwhile play (April 15th 81.5/94 short strangle).
EWZ: The Brazil ETF still has a bit of "kick" in it, with implied volatility rank at 72 and implied volatility at 58. For lack of premium selling elsewhere and to offset in part a tested iron fly setup I have on (see Post below), I've dispersed risk by laddering setups in this underlying (short strangles/iron condors) through several expiries, which doesn't tie up much buying power given the price of the underlying.
VIX/VXX: With VIX at these levels, I'm considering loading additional long positions here, although I don't want to go all crazy large at once. My setup of choice has been VXX long-dated diagonals/synthetic longs/poor man's covered calls with the back month long option in the September expiry, which allows me plenty of time to be right without having to leg into and out of, for example, short put verticals repeatedly. This also allows me to "swim with the tide" with the short call, since we're in contango here, which exerts a downward pressure on price (although this also affects the value of the long-dated option in the short term). (See VXX Posts, below).
As a side note, I'm avoiding plays in leveraged products like UVXY and SVXY due to pending SEC regulations that may affect these instruments. Although these regs are mainly focused on 2x and 3x leveraged products, I don't want to be in any leveraged product with a long-term setup whose liquidity and/or viability might be affected by implementation of the regs.
FXE: With the Euro hovering slightly below my sell area (1.14), I'm looking at getting into the Euro proxy FXE with a short play of some kind going forward. However, it may pay to be patient here, since we've have had "dovish gruntings" from the Fed which may put a damper on Greenback strength for a bit of time, as well as some modestly positive ECB data. As compared to spot, I could still potentially pull the trigger on a short FXE setup of some kind here, steering well clear of recent strength areas (e.g., 8/24 "risk off" spike to 114.81 or the Fib line at 116-ish).
