In fact this post it would be more about how can you get involved into euro and swiss franc movements without trading Forex and using instead options trading. Personally I don't recommend Forex trading despite the fact that you can use the leverage, which most likely even looks good it will turn and bite your ass...
Anyway, trading Forex implies trading from chart analysis which from my experience even it's easier to assimilate, overall it doesn't make a constant positive contribution to your trading.
I will sketch though 2 trading charts analysis:
VSA (Volume Spread Analysis)
- for this I think is more representative to look at /6S chart (swiss chart symbol in futures market). Cause in forex market there is not volume, it's just an fortunate aproximation.
Let's see what heppen from 01/15/15 to today:
Let's see what heppen from 01/15/15 to today:
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| Volume Spread Analysis chart |
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AMT(Auction Market Theory) chart
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With Euro in strong down trend, with prices at almost 10 years low and without any signs of strength in CHF. I don't see any directional opportunity right now considering chart analysis, beside watching the above levels for more clarity.
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| Euro weekly chart |
If we take a look at Euro and Swiss futures symbols we see that for next 3 months Euro price is seen slightly higher and Swiss unchanged!
So considering all this, how can we translate it into a good trade? Trading options, for me a good trade concept relates to a trade with higher POP (probability of profit) than 50%.
Considering FXE, which is Euro ETF and the fact that today IV Rank is 55% we should look for a credit spread.
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| Options Strategy set up view |
As we can see the short strikes are inside 1 standard deviation from the current price and the break-evens are a bit closer to 1SD. Probability to be OTM for the lower break-even 106.95 is around 76.30% and for upper which is 113.05 is 81%, this is the probability for the price to be above/bellow lower/upper break-even at expiration. Overall we risk 195 dollars to make 105 dollars with an overall probability of success of 55%.
Another alternative if you want to increase the probability is to use a strangle which implies just to use the short strikes without the buying the wings. You will make around the same money but with unlimited risk theoretically and with the POP > 70%.
ETC...
Another alternative if you want to increase the probability is to use a strangle which implies just to use the short strikes without the buying the wings. You will make around the same money but with unlimited risk theoretically and with the POP > 70%.
ETC...
This is just a quick example how can you play the ideas using options trading strategies related to Euro.
Something similar could be done in FXF, which is the ETF for Swiss but is not liquid and I don't trade if i don't have liquidity which is the insurance that I can get in/out of the trade when I want!
One can elaborate more, but I just wanted to post a sample of my ideas for my buddy Spirtoru! ;)
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