The option strategies profiled on 9 February (below) have performed excellently. Indeed, I had a number of clients try to express this view in ‘spot’ only to get knocked out with small profits in amongst the early two way chop before the cross took off. Guys with 3 month option strategies are up about 150% on investment at the moment.
Sent: Thursday, 9 February 2012, 12:58pm
Subject: EUR/AUD – another look (buy call option)
I have just been exploring other ways to capture this trade as I am very upbeat that Greece will come up with the goods in the next few days. Greece has come this far that it is unlikely to cock things up now especially now that the country is governed by non-politician in Lucas Papademos, a Greek economist who was previously Governor of the Bank of Greece from 1994 – 2002.
His appointment has largely taken the political ‘conflict of interest’ (not having to be re-elected) out of the way. Indeed all the charts, be it EUR/JPY, EUR/USD or EURAUD all scream that the smart guys understand the likely outcome of the PSI negotiations.
A 1 month EUR/AUD ‘at the money’ call option is ridiculously cheap in my opinion at 0.0175 points. The cross went up that far on Tuesday alone, let alone having the opportunity for gains over 1 month.
Look at the long term chart of the levels needed to profit (I’ll expand it on the 2nd chart).
A closer look shows that the average move per month over the last 3 months has been about 600 points (premium in this case 175 points) and we know the EUR market is terribly short.
If Greece defaults you have no further risk that your premium paid, no slippage, no surprises.
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