FXY (CurrencyShares Japanese Yen Trust), the ETF tracking dollar/yen (USD/JPY) exchange rate, has been in steady decline since mid-November of last year, leading up to Shinzo Abe’s victory in the December General Election. The yen continued to slide after the election in response to Abe’s monetary easing policy aimed at aggressively targeting 2% GDP growth.
This past Sunday, the yen got pushed down further on rumors that Abe would appoint the ultra-dovish Haruhiki Kuroda as the next governor of the Bank of Japan. Abe has long had a fractious relationship with the central bank, and such an appointment would pave the way for further easing. Should the appointment be verified expect to see sharp movement to the downside in the near-term, whereas the emergence of a more conservative candidate should fuel a rally.
My Trade: Buying the FXY April 107 Straddle (Buying the April 107
Call and April 107 Put) for $4.15 total
Risk: $415 per 1 lot
Reward: Unlimited
Breakeven: $102.85 and $111.15
Greeks of Trade:
Delta: Positive
Gamma: Positive
Theta: Negative
Vega: Positive
WATCH HIS VIDEO HERE:
[Editor’s note: Learn more about Keene’s trading ideas here.]
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