All eyes are on the most traded pair seeing 9 year lows earlier today, now trading at 1.17958.
Tomorrow, at 13:30 GMT, the anticipated US NFP will be released and the word on the street is that we might see some disappointing numbers. Regardless if the “street” is right or wrong, there is no doubt that these are interesting levels and with a continuous decline driving the pair down, betting on the pair’s temporary rebound is not a far-fetched assumption.
An attractive way to leverage this unique opportunity with a limited loss and no fear of being stopped out of your position, is buying options. In this case, two out-of-money Calls (OTM options are options that their strike is further away from the spot). This position will begin profiting if the pair’s closer to the money strike is reached and will increase its profit once the strike of the other option is reached and exceeded. The leverage for this position is 1:240 with the total amount being 200K (each option is on the amount of 100K) and your premium at open is $835.
The idea behind this position is that if we encounter a rebound from these levels due to weaker than expected NFP data combined with these already extreme levels, the move up can be dramatic.
Below you can find a position involving the two OTM Calls. One with strike 1.18219 and the other 1.18573. The strikes, number of Calls and amount on which each Call is on can be adjusted according to the amount of risk you wish to take.
In the graph and table below you can find the different rate scenarios at expiry. Your maximum funds at risk equals $835. Your breakeven level equals 1.18805 and notice how your profit increases by 70% with every 29pips step.
Tomorrow, at 13:30 GMT, the anticipated US NFP will be released and the word on the street is that we might see some disappointing numbers. Regardless if the “street” is right or wrong, there is no doubt that these are interesting levels and with a continuous decline driving the pair down, betting on the pair’s temporary rebound is not a far-fetched assumption.
An attractive way to leverage this unique opportunity with a limited loss and no fear of being stopped out of your position, is buying options. In this case, two out-of-money Calls (OTM options are options that their strike is further away from the spot). This position will begin profiting if the pair’s closer to the money strike is reached and will increase its profit once the strike of the other option is reached and exceeded. The leverage for this position is 1:240 with the total amount being 200K (each option is on the amount of 100K) and your premium at open is $835.
The idea behind this position is that if we encounter a rebound from these levels due to weaker than expected NFP data combined with these already extreme levels, the move up can be dramatic.
Below you can find a position involving the two OTM Calls. One with strike 1.18219 and the other 1.18573. The strikes, number of Calls and amount on which each Call is on can be adjusted according to the amount of risk you wish to take.
In the graph and table below you can find the different rate scenarios at expiry. Your maximum funds at risk equals $835. Your breakeven level equals 1.18805 and notice how your profit increases by 70% with every 29pips step.
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