Two important data figures will be released at 12:30 GMT; Canadian employment data, which is expected to drop 5,000 in jobs and the unemployment rate to rise from 6.6% to 6.7% and, the U.S. Producer Price Index (PPI) YoY is expected to be unchanged at 0%.
Currently, this week USD/CAD traded at a high of 1.2788, now at 1.27387. As shown in the chart below, these are the highest levels since 2008.
There is a rise in USD/CAD volatility mainly due to aggressive U.S. Dollar strength and also due to these new highs and we expect volatility to continue.
To trade the volatility and take into consideration the price is at a 6 year high, you could place a long straddle position with a downside bias.
A long straddle involves buying both a Put and a Call ATM (at-the-money). To place a bias on the downside you will buy a Call and Put with a 1:2 ratio. This means you will profit if the market trades in either direction but you profit more if it trades down.
Below is a scenario graph and table presenting your payout at expiry over a range of market rates. The Call option is of amount $50,000 and the Put is $100,000, both have strike rate = 1.27387.
The content provided is made available to you by ORE Tech Ltd for educational purposes only, and does not constitute any recommendation and/or proposal regarding the performance and/or avoidance of any transaction (whether financial or not), and does not provide or intend to provide any basis of assumption and/or reliance to any such transaction.
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