Market Overview

US New Home Sales Report Out Thursday For Trading


US New Home Sales numbers are released Thursday 10:00 a.m. ET. The UK Referendum (Brexit) is also going on Thursday and will most likely impact the markets. New Home Sales is an annualized number of new single-family homes sold in the previous month. It’s forecast to come in at 561k and if the actual is greater than forecast, that is good for currency.

It’s possible to trade this event with defined capped risk using Nadex EUR/USD spreads. The strategy would be a neutral premium collection trade employing the Iron Condor setup. Two spreads are traded, one bought below the market with the ceiling where the market is trading, and one sold spread above the market with the floor where the market is trading at the time. The profit potential should be a minimum of $30, around $15 for each spread.

For this trade, entry can be as early as 9:00 a.m.ET for 11:00 a.m. ET expirations. This news event typically sees the market react by making a move and then a pull back. The closer the market pulls back to center as the time runs out, the greater the profit. Max profit is when the market expires right between the spreads at settlement time.

As long as the market stays between the breakeven points of the Iron Condor, then the trade will make some profit. These points are approximately 30 pips up and down from where the market is at entry, depending on the total profit potential and exact entries. Stops can be placed to keep risk to a 1:1 risk reward ratio, at approximately 60 pips above and below where the market is at entry.

With the Brexit vote, there could be a great deal of implied volatility in the prices. Profit potential can be higher than $30. With the Nadex spreads, traders have the advantage of knowing what their total risk is at entry, and confidence knowing there are no margin calls.

Posted-In: Binary Options News Education Eurozone Futures Commodities Options Forex


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