UK Pricing Index Provided A Trading Opportunity
On Tuesday, February 16, 2016, National Statistics released numerous pricing numbers revealing the state of the economy for the UK. Of high importance is the Consumer Price Index measuring price changes of goods and services purchased by consumers. When consumer prices go up the inflation can be a cause of concern for the Central Bank to raise interest rates. For these reasons, traders watch this report. The expected market movement and pull back can make for a good Iron Condor trade using Nadex GBP/USD spreads.
Along with the Consumer Price Index (CPI), the Core CPI, the Producer Price Index (PPI), the Core PPI, the Retail Price Index (RPI), and the House Price Index (HPI) are also a trading opportunity if nadex spreads are using the night before (with 7am expiration).
Once the reports are released, the market tends to react, move and then pull back. It can often settle right where it started out. The strategy of the Iron Condor, buying a spread below and selling a spread above, is preparing for the market to do exactly that kind of move.
The market can also just stay where it is and not move at all and you would profit. There is a wide area for the market to settle at expiration where you can still profit. The market can move up 35 pips before it hits the upper breakeven point and it can move down 35 pips before it hits the lower breakeven point.
© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.