Trade idea
6E strangle
The euro is considered the best currency for a strangle due to its liquid markets and the speaker's personal position as a long holder. The speaker is short puts in the yen and suggests that the euro's market is more favorable for options trading compared to the British pound, which has less liquid options markets. The speaker believes the euro will rally to 1.36 and potentially higher, with a stop-loss at 1.10.
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Strategystrangle
Assetcurrency
ExpirationMay
Time horizonshort-term
Entry / triggerMarket conditions suggest a potential rally in the euro
Target / exit1.36 and 1.45, with 1.50 as an ideal target
Invalidation / stop1.10 as a stop-loss level
SpeakerDave
Risks- Market volatility
- Liquidity issues in the British pound options
- Failure to meet the target price
Trade idea
6J short puts
The speaker has been short puts on the Japanese yen (6J) for 4 or 5 years, with the 64, 65, and 66 puts currently in the money. The premium has been coming in nicely, and the speaker believes this has been one of the best trades on the board. The strategy is to wait for a rally in the Japanese yen, with the August 7th 62.5 puts sold for 450, equivalent to $562. The speaker is also short a 70-75 call spread in Micron and a strangle in Netflix, indicating a diversified approach to short positions.
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Strategyshort puts
Assetcurrency
ExpirationAugust 7th
Time horizonlong-term
Entry / triggercurrent price in the money
Target / exitwaiting for a rally in the Japanese yen
Invalidation / stopnot explicitly stated
SpeakerScott
Risks- Potential for further price declines in the Japanese yen
- Risk of the rally not occurring
- Market volatility affecting the premium
Trade idea
EUR options spread
The trade involves buying 19 delta puts and calls on the Euro, creating a delta neutral position. The strategy is based on the Euro's recent downtrend and the expectation of range-bound movement. The trade is inexpensive and requires minimal buying power, with the potential for profit from implied volatility and range-bound movement. The invalidation level is a significant break of the range, which would indicate a shift in market sentiment.
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Strategyoptions spread
Assetcurrency
Expirationnot specified
Time horizonShort-term, with potential for multiple trades
Entry / triggerMarket is in a range, with no clear directional bias
Target / exitProfit from implied volatility and range-bound movement
Invalidation / stopSignificant break of the range or unexpected market movement
SpeakerTom Sosnoff
Risks- Market volatility
- Unexpected directional movement
- Liquidity issues
Trade idea
EUR strangle
The speaker has been short strangles on the euro for the entire year, noting that while the returns have not been great, they are up money. They mention that the euro is the most liquid of all the currencies and that they like selling puts here. The speaker also notes that the IVR is currently at 60%, which they find high for the euro, and that they are looking to sell naked puts on Rocket Lab.
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Strategystrangle
Assetcurrency
ExpirationSeptember
Time horizonshort-term
Entry / triggerIVR at 60%
Target / exitpremium destruction
Invalidation / stopif the euro moves significantly against the short position
SpeakerLarry Olsson
Risks- Market volatility
- Potential for significant losses if the euro moves against the short position
- The strategy may not be suitable for all traders
Trade idea
yen futures sell puts
The yen is trading at a 5-year low, and the speaker has been long yen futures for three years while shorting puts. The strategy involves selling puts to collect premium while being prepared for downside risk. The yen's historical performance and current low suggest a potential long-term bullish trend, making this strategy viable. However, the speaker notes that the yen has not moved significantly in three to four years, indicating the need for careful position management.
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Strategysell puts
Assetcurrency
Expirationnot specified
Time horizonlong-term
Entry / triggeryen trading at a 5-year low
Target / exitnot specified
Invalidation / stopnot specified
SpeakerScott
Risks- downside risk if the yen declines
- limited liquidity in certain options
- volatility risk
Trade idea
YEN Sell out-of-the-money puts on futures
To get long yen, the speaker suggests selling out-of-the-money puts on futures. This strategy allows for participation in the upside while limiting downside risk. The speaker emphasizes the importance of selecting the active cycle and staying small due to low liquidity in the yen futures market. The trade is based on the expectation that the yen will appreciate against the dollar, which has been weakened recently.
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StrategySell out-of-the-money puts on futures
Assetcurrency
Expiration35 days
Time horizonShort-term
Entry / triggerMarket direction is expected to be positive
Target / exitMarket moves in the expected direction
Invalidation / stopMarket moves against the position
SpeakerTom Stnoff
Risks- Market moves against the position
- Low liquidity in yen futures
- Inability to exit the position if the market moves against the trade
Trade idea
yen selling puts
The speaker has been long yen for two and a half years and has been selling puts to collect premium. The rationale is that the yen has not had an uptick but still makes money because it doesn't go down enough to lose. The strategy is to sell puts to collect premium while maintaining a long position, which is effective in a range-bound market.
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Strategyselling puts
Assetcurrency
Time horizonlong-term
Entry / triggermarket is open and yen is being traded
Target / exitprofit from premium collected
Invalidation / stopif yen moves significantly against the position
Speakerspeaker
Risks- significant loss if yen moves against the position
- market volatility
Trade idea
CHF spot FX trading
The Swiss franc is more accessible in the spot FX market due to higher liquidity and the absence of the historical overnight price move that caused significant losses in futures trading. Spot FX allows for smaller trade sizes and is more suitable for retail traders. The lack of options liquidity in the Swiss franc further discourages futures trading.
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Strategyspot FX trading
Assetcurrency
Time horizonNot specified
Entry / triggerTrading the Swiss franc in the spot FX market due to higher liquidity and accessibility
Target / exitNot specified
Invalidation / stopNot specified
SpeakerArthur
Risks- Market volatility
- Liquidity risks in spot FX
- Potential for large price movements
Trade idea
Trade idea calendar spreads
short puts in the yen can be a viable strategy for profiting from volatility
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Strategycalendar spreads
Assetcurrency
Time horizonshort-term
Entry / triggershort puts in the yen
Target / exitprofit from volatility
SpeakerTom
Risks- market direction
- volatility changes
Trade idea
yen range-bound trading
The yen has been range-bound between 63 and 67 for three years, making it an ideal candidate for a sell puts strategy. The speaker has successfully used this strategy for two consecutive years, leveraging the high volatility and the predictable range. The strategy is based on the assumption that the market will remain within this range, allowing the seller of puts to collect premiums. The invalidation level is if the yen breaks out of the range, which would indicate a shift in market dynamics.
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Strategyrange-bound trading
Assetcurrency
Time horizonshort-term
Entry / triggermarket range-bound between 63 and 67
Target / exitcollect premium from put sales
Invalidation / stopmarket breaks out of the range
Speakerspeaker
Risks- Market volatility could increase
- Range could break
- Premiums may not cover potential losses
Trade idea
IVR strangle
strangle strategy with specific strike prices and expiration date
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Strategystrangle
Assetcurrency
ExpirationAugust 21st
Time horizonshort-term
Entry / triggerstock's up today
Target / exitmax profit of $39
Invalidation / stopstock's movement
Speakerunknown
Risks- stock's movement
- market volatility
Trade idea
yen put-selling
The speaker suggests selling puts on the yen as it has become cheap, implying a potential for upward movement or a desire to capitalize on the undervaluation. The trade is based on the belief that the yen may rebound or stabilize, allowing the seller to profit from the premium collected. The speaker also mentions selling puts on bonds at a specific strike price, suggesting a similar strategy of profiting from potential price movements.
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Strategyput-selling
Assetcurrency
Expirationnot specified
Time horizonshort-term
Entry / triggerwhen the yen is undervalued
Target / exitnot specified
Invalidation / stopnot specified
SpeakerTom
Risks- Market volatility could lead to losses if the yen declines sharply
- The trade is speculative and requires careful monitoring of market conditions
Trade idea
Trade idea buying the yen when it is cheap
the yen is a commodity that can be traded like natural gas or soybeans
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Strategybuying the yen when it is cheap
Assetcurrency
Entry / triggerwhen the yen contracts to a level
Target / exitprofit from the yen's cheapness
Invalidation / stopa shock to the upside
Speakerunknown
Trade idea
yen put selling
market is expected to stay within range
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Strategyput selling
Assetcurrency
ExpirationOctober
Time horizonshort-term
Entry / triggermarket within range
Target / exitcredit pop of 25%
Invalidation / stopmarket outside range
SpeakerScott
Risks- market moves outside range
- orders not filled
Trade idea
Yen put selling
The speaker believes that the yen has been range-bound between 63 and 70 for the past four years, making it a suitable candidate for short put strategies. The strategy has been profitable in this environment, but the speaker expresses concern about potential upside volatility. The trade is based on the assumption that the yen will continue to trade within this range, and the premium collected from selling puts will be a source of profit.
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Strategyput selling
Assetcurrency
Time horizonShort-term, with a focus on the range-bound movement
Entry / triggerYen trading within a range of 63 to 70
Target / exitProfit from the premium collected if the yen remains within the range
Invalidation / stopIf the yen breaks below 63 or above 70, the trade may be invalid
SpeakerAdam
Risks- Potential for significant upside volatility
- If the yen breaks below 63 or above 70, the trade may result in losses
Q&A
Why did the yen go up with Japan doing quantitative easing?
The Japanese yen increased because there was a lack of sellers, and the market dynamics favored an upward move. The speaker explains that the puts (bearish options) were trading cheap, indicating low demand for selling the yen, while calls (bullish options) were rich, suggesting a higher probability of an upward move.
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Actionable takeawayMarket sentiment and supply-demand dynamics can cause unexpected movements in currency values, even with central bank interventions.
Q&A
Is there a way to approach trading the yen less directionally without using futures or forex directly?
The speaker suggests using FXY futures as an alternative to trading the yen directly, but acknowledges that there are other more profitable opportunities in the market.
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Actionable takeawayFXY futures can be used to trade the yen without direct forex exposure.