27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
Currency news continues to be monopolized by the trajectory of the Japanese yen, which today has taken a temporary break from its ascent as dealers grow increasingly wary of intervention. The problem facing Japan is an awkward one. On its shoulders Japan bears the yoke of slowing global economic activity in the form of a rising yen. Alleviating such an uncomfortable task makes the proposition of currency intervention awkward to say the least. In short, the rising yen is a symptom of the world's problems and means that attempts to combat its strength could fall foul of any further weakening in the health of the world economy.
Japanese yen - Japanese stocks continued to decline deeper into bear territory overnight as the hand-wringing over whether the Bank of Japan would be asked to sell its currency to the seemingly endless string of buyers continued. A 15-year low for the dollar at ¥83.59 on Tuesday followed further evidence that the world's number one economy can't recover without consumer stimulus. The yen dipped overnight and the dollar recovered to ¥84.68 while the euro also recovered to ¥107.64 following a slump to a nine-year low at ¥105.43 early on Tuesday. Data out of Japan overnight showed that exports during the month of July didn't recoil as far as was feared as they grew 23.5% year-on-year. Imports at the same time did contract further than expected and showed a 15.7% annual pace of gain despite a recent boost to consumer affordability through a stronger yen.
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Comments today from Japanese Finance Minister Noda pledged "appropriate action" on the currency, but failed to set out any plan. Currently his methodology appears to be one of biding time to assess the impact on exporters. Meanwhile the Nikkei newspaper ran a story without citing any source claiming that the Bank of Japan would soon announce measures to further loosen monetary policy. It meets during the first week of the new month and the Nikkei suggests that the current plan aimed at funding lenders through a ¥20 trillion three-month lending program at rates of just 0.1% will be expanded to a similar six-month program of ¥30 trillion. However, Prime Minister Kan has recently been busy urging ministers to find ways of expanding soon-to-end stimulus programs including incentives to buy electronic goods and cars. There is a clear recognition that Japan has a problem, but that tackling it involves more than its central bank simply dumping its rising yen.
Euro - The single European currency rose earlier in the session following an unexpected jump to a three-year high in German business confidence. The IFO August survey of 7,000 company executives bucked forecasts of a decline coming in at an improved index reading of 106.7 after 106.2 in July. The euro reached its best level of the session at $1.2726 before a rejuvenated dollar sent it back down to $1.2633. The data reiterates the healthy summer revival in the fortunes of the Eurozone and shows that the expansion is not yet shot as many forecasters believe. Last week the Bundesbank revised upwards its 2010 forecast for growth to 3% from 1.9% after a 20-year peak in second quarter growth. Last year the economy contracted by 4.7%. Some of today's loss of confidence in the euro also stems from an S&P downgrade to Irish country debt.
U.S. Dollar - The dollar was seemingly a one-way bet ahead of Tuesday's existing home sales data. However, a reversal upon the delivery of worse-than-expected news was a classic case of "buy-the-rumor-and-sell-the-fact." It's hard to discern whether investors were collectively ditching the dollar in response to a decline of 25% in July home sales and making the point that the dollar is far from the safe haven that many claim. The dollar index nevertheless continues to trade sideways-to-higher and appears poised to continue its ascent barring a respite for investor appetite for equities.
British pound - There is little fresh news to drive the pound midweek and as such it trades little changed against the dollar at $1.5435. The rebound from $1.5372 on Tuesday was impressive as investors thought twice about the one-way rise of the dollar. The pound also made gains on Wednesday against a euro that today buys 81.86 pence.
Aussie dollar - An earlier in the session rebound in the Aussie has proved to be unsustainable. The rising tide carrying the promise of yen intervention buoyed the Aussie and lifted it as high as 88.95 cents against the dollar and to ¥75.26 against the yen. However, it has subsequently pared gains and slipped into the red against both where it now buys 87.97 U.S. cents and ¥74.17.
Canadian dollar - On Tuesday the Canadian dollar was quick to take back a penny of its losses as dealers responded to weakness in the U.S. housing market. That lifted the loonie off its weakest level in six-weeks. Nevertheless, today's souring in the risk tone as the morning unwinds has seen the Canadian dollar fall right back to that low point and beyond before steadying at 93.91 U.S. cents.
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.