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An interesting trade has developed in the September Yen
TREX calling the following:
Scenario One:
1. 70% chance that the Yen trades 8580 or better over next 3 days.
Once the Yen reaches 8580 then 88% chance the Yen will break down
and trade to 8190. BUT if the Yen continues to trade up and
the Yen closes over 8714 then 90% chance the Yen trades to
8900 or better.
Scenario Two:
2. 30% chance that the Yen breaks immediately below the 8450 level
If this occurs there is a 90% chance the Yen trades down rapidly
to 8190.
Strategies:
Buy ATM calls OR Bull Vertical Option Spreads
ANY CLOSES UNDER 8450, SELL THE FUTURES.
Liquidate Options if the Yen stalls in the 8580-8650 range, and prepare
to go short. Buy one OTM Call option just in case.
If the market keeps going up, and especially if the Yen
can close over 8714 Take partial profits on options, BUT continue
to hold one call option in case the market trades even higher.
Be prepared to move quickly to a selling posture on any sign of
weakness. The spec longs will be feeling the FND blues soon.
Have fun!
Walt Downs
CIS Trading
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