Options for stock investors. A better way to trade.

YEN for 50% BullsEye Option Trade Alert FXY EXIT – Sell FXY March 80 Call @ 9.00 or better

50% Yen TARGET TRIGGER 

Place order to sell the FXY March $80 Call at $9.00 or better for 50% profit .

 

 

 

The deep in the money option will have intrinsic value of $9.00 with FXY at $89.00.

 

ORIGINAL TRADE ALERT BELOW from October 16th

 

 

 

 

 

Japanese JUMP

New Trade Alert for (FXY)

 

 

Japanese Yen March $80.00 Call @$6.00 or less

 

Dollar decline under midpoint pivot of drop from August top is a strong sign of  trend reversal.  

 

Note that US Dollar DID NOT make new highs when rates rallied to multi year peak.

 

 

Japanese Jump 

 

 

Yen has traded sideways from $.80 to $.90 for two years.  A recent pop above the $.85 midpoint is positive for currency rally.

 

 

FXY also saw bullish divergence with new annual lows but no new highs in volatility.  

 

 

 

Instead of buying long shares, a stock substitution strategy limits risk to the premium paid with unlimited upside profit potential. Less capital is required and the risk is less in dollar terms than buying shares outright.

 

 

Only close below the $80 support level on the weekly basis would negate the bullish trend.

 

 

The Options Way: Unlimited Upside Potential with Limited Risk.

An FXY long call option can provide the staying power in a potential larger trend extension.  More importantly, the maximum risk is the premium paid.

 

 

One major advantage of using long options instead of buying or selling shares is putting up much less money to control 100 shares — that’s the power of leverage.

 

 

Choosing an option can sometimes be a daunting task with all of the choices and expiration months.  Simply put, traders want to buy a high probability option that has enough time to be right.

The option strike price is the level at which you have the right to buy without any obligation to do so.  In reality, you rarely convert the option into shares. Simply sell the option you bought to exit the trade for gain or loss.  

There are two rules options traders need to follow to be successful.

Rule One:  Choose an option with 70% plus probability.  The Delta is a measurement of how well the option reacts to movement in the underlying security.   It is important to buy options that payoff from only a modest price move. 

 

 

There is no need to ONLY make money on the all but infrequent large price explosion.

Any trade has a fifty/fifty chance of success.  Buying options ITM options increase that probability.  That Delta also approximates the odds that the option will be In The Money at expiration.

 

Buying better options are more expensive, but they are worth it — the chances of success are mathematically superior to buying cheap, long shot Out Of The Money lottery tickets that rarely ever pay off.  
 
With FXY trading at $85.25, for example, an In The Money $80.00 strike option currently has $5.25 in real or intrinsic value.  The remainder of any premium is the time value of the option.

Rule Two: Buy more time until expiration than you may need.  Time is an investor’s greatest asset when you have completely limited the exposure risks. 

Investors often buy too little time for the trade to develop.  Nothing is more frustrating than being right but only after the option has expired premature to the market move.

 

 


Trade Setup: I recommend the FXY March $80 Call at $6.00 or less.

 

 

This option strike gives you the right to buy the shares at $80  with absolutely limited risk.  The $80 price has not been seen since January of 2016. 

   

 

The March option has six months for BULLISH development.  An 90 Delta on this strike means the option will behave much like the stock.
 
The maximum loss is limited to the $600 or less paid per option contract. 

 

 

The upside, on the other hand, is unlimited.

 

 

The FXY option trade break-even is $86.00 or less at expiration ($80 strike plus $6.00 option premium). That is 75 cents above the current price.

 

 

This solid push above this $85 resistance targets a move to $90 channel top.  The option investment gain would be 50%.

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