20 Jul 2015
Entering a 1m EURUSD 1.08 -1.05 put spread – Nomura
FXStreet (Mumbai) - The Global FX strategy team at Nomura prefers entering one month EUR/USD 1.08-1.05 put spread, which offers 5:1 payout.
Key Quotes
“Our interpretation of the price action of late is that, while US data and US rates have provided no meaningful fresh signal this week, the notion that headline risk from Greece is moving to the background has given traders an opportunity to re-establish positions, including USD long positions. In addition, a continued easing trend outside the US (most recently exemplified by Canada) is helping this sentiment.”
“It is possible that this repositioning could sustain the momentum for a bit longer and see EURUSD trade toward 1.07 without a huge amount of fresh news. It is conceivable that a better payroll report, better housing data, and better retail sales could push the implied probability of a September rate hike above 50% over the next month which could then realistically see a test of 1.05 for EURUSD.”
The Put spread strategy – vertical spread – offers limited profit potential and limited loss potential and are relatively cheaper to employ.
Key Quotes
“Our interpretation of the price action of late is that, while US data and US rates have provided no meaningful fresh signal this week, the notion that headline risk from Greece is moving to the background has given traders an opportunity to re-establish positions, including USD long positions. In addition, a continued easing trend outside the US (most recently exemplified by Canada) is helping this sentiment.”
“It is possible that this repositioning could sustain the momentum for a bit longer and see EURUSD trade toward 1.07 without a huge amount of fresh news. It is conceivable that a better payroll report, better housing data, and better retail sales could push the implied probability of a September rate hike above 50% over the next month which could then realistically see a test of 1.05 for EURUSD.”
The Put spread strategy – vertical spread – offers limited profit potential and limited loss potential and are relatively cheaper to employ.