This has brought about some major action in the EUR/USD pair opening up the opportunity to place a one-day option trade.
Below is a chart showing the huge decline in EUR/USD over the last two days.
With this strong decline, buying a 1 day ATM (at-the-money) Call option, to trade a rebound, is now very cheap; the quick decline in EUR/USD has caused the price of Call options to drop sharply.
The below chart and table shows the profit or loss, at expiry, of an ATM EUR/USD call option over a range of market rates. The deal size of the option is 100,000 and the strike at time of trade placement equals the spot rate at 1.1210. This trade will expire tomorrow at 15:00 GMT after U.S. GDP and Personal Consumption data. If EUR/USD, at expiry, is trading 60pips above its current level you will profit 100%. Note that, today the pair declined around 150 pips in a few hours alone!
Recommended Content
Editors’ Picks
AUD/USD could extend the recovery to 0.6500 and above
The enhanced risk appetite and the weakening of the Greenback enabled AUD/USD to build on the promising start to the week and trade closer to the key barrier at 0.6500 the figure ahead of key inflation figures in Australia.
EUR/USD now refocuses on the 200-day SMA
EUR/USD extended its positive momentum and rose above the 1.0700 yardstick, driven by the intense PMI-led retracement in the US Dollar as well as a prevailing risk-friendly environment in the FX universe.
Gold struggles around $2,325 despite broad US Dollar’s weakness
Gold reversed its direction and rose to the $2,320 area, erasing a large portion of its daily losses in the process. The benchmark 10-year US Treasury bond yield stays in the red below 4.6% following the weak US PMI data and supports XAU/USD.
Bitcoin price makes run for previous cycle highs as Morgan Stanley pushes BTC ETF exposure
Bitcoin (BTC) price strength continues to grow, three days after the fourth halving. Optimism continues to abound in the market as Bitcoiners envision a reclamation of previous cycle highs.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Federal Reserve might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.