Hey everyone, Kirk here once again at optionalpha.com and first, sorry that this video is later at night. I had like back to back to back training sessions today which was simply insane. I’& rsquo; m just still getting this out undoubtedly to make sure that we cover up all the trades that we had both today on Tuesday, September 19th and also yesterday on Monday. Now, trades on Monday that we got into, we just got into one. Once again, if you’& rsquo; re new to Option Alpha, in some cases if we just have one single trade in a day, we may not cover it in a whole video update for the whole process and the entire sequence that goes through it, but we’& rsquo; ll always cover it in the next day and it’& rsquo; s never time sensitive enough that you need to get into it that very same day. If you need to wait or desire to wait, that’& rsquo; s alright. Just backtracking a little bit to Monday, we went on and entered certainly the sell FXY, another iron butterfly mainly since premium is so much better when you can cost the cash choices versus simply offering naked out of the loan choices in FXY.
We offered the at the cash 86s and then purchased choices out on either end at 89 and 83 pretty cheap. It was a pretty good trade. Obviously, it’& rsquo; s a new one for FXY that we attempted to get into recently on Friday, but simply didn” t get filled. For FXY, I suggest, the story for us is really that the stock has had a pretty great down move which is excellent and indicated volatility has actually turned up a bit, so we desire some direct exposure. We wish to get some currency exposure in our portfolio. That” s why we did FXY the other day. That’& rsquo; s why we & rsquo; re doing FXE today and we & rsquo; re simply attempting to diversify what we have here certainly.
The next one that we entered today was the FXE iron butterfly. We centered it in fact at 15.5. Now, I really put on” t like to trade the half strikes, however it was really the very best decision in this case for FXE because the stock was trading exactly at 15.5. If you don’& rsquo; t like the half strikes, if that puzzles you or tosses you off, then opt for the really tight iron condor, so the 15s and the 16s. We simply wished to collect as much premium as possible here and we went for the 15.5 s. Then again, notice that we purchased choices out an equal range on either end quite cheap here. Around like $10, $15 usually is what we wind up spending for these. The call side is in fact a bit more costly than the put side which is strange for FXE. We wear’& rsquo; t typically see that type of reverse skew taking place. But again, with FXE, we want some direct exposure here. We believe that given that the technicals are still starting to challenge the topside of where they’& rsquo; re at, the overbought type scenario, it’& rsquo; s not all overbought yet, however they’& rsquo; re beginning to challenge it that we could continue to trade sideways here for FXE.
That’& rsquo; s why we & rsquo; re starting to build these small positions. Actually, for me today with October, we’& rsquo; re about 31 days out of expiration. We’& rsquo; ve got about another day or two that we can start adding positions to October prior to we just need to cut it off and keep up what we have. We begin entering that 26, 25 day limitation. We want to cut off October which has still been quite good. We’& rsquo; ve got a great deal of premium on and we wish to begin developing out November. Again, if FXE moves substantially, we’& rsquo; ll contribute to this. If not, this may be the only position that we have in FXE for October and once again, that’& rsquo; s all right. We & rsquo; ll start constructing out November. As always, hopefully you guys enjoy these video updates. If you have any comments or questions, let me know in the comment area. Until next time, pleased trading!
