The Fed’s next action is still at the front of almost everyone’s mind. Will they or won’t they? If not in December, then when? Will it help or hurt? The debate goes on, some market observers more sure of their opinion than others.
No matter what your opinion on the Fed’s decision, you can probably see some strength in the U.S. Dollar. I think most market followers would also agree that any rate hike, even a small one would help strengthen the Dollar. One can debate whether a strong greenback is good for the current economy or not. Recent disparity between the Dollar and other currencies has been unfriendly to exports. The flipside of that is the increased buying power on the international stage. One way to take advantage of a strong USD is to trade foreign currencies against it.
I am going to trade the Canadian Dollar futures, and try and take advantage of some range bound movement. I like selling the December Canadian 7400 put, along with the 7800 call as a strangle. I am trying to collect 60 points ($600.00) in premium. These options don’t expire until December 9th, but I don’t intend to take the trade into expiration. Initial exit target is set at 10 points, and I don’t want to risk more than a 30 point loss. As always make sure this trade is suitable for your account and that you meet margin requirements.
For those interested Walsh Trading is holding our weekly grain webinar Thursday October 20th at 3:00 PM Central time hosted by our Senior Grain analyst Tim Hannagan. Tim has been ranked #1 by Reuters and Bloomberg in 2011 and 2012 for his most accurate end of year price predictions for soybeans and corn. Registration is free and if you cannot attend live, a recording will be sent to your email upon signup.
John Weyer
Director of Commercial Hedging
Walsh Trading Inc.,
jweyer@walshtrading.com
888 391 7894
RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.
