Market Curiosity: Exploring Markets And Systems

June 3, 2012

Buying Euro calls due to commercials being so net long. (-82%)

Filed under: -75 to -99%, Long Calls — Tags: — Jeff Fitzmyers @ 12:08 pm

Long an August 1.32 call at 0.01101. (currently down 2/3rds)

+ Commercials (green line) are hugely net long.
+ Also interesting, the small traders (blue line) — weak hands — are record net short.
+ Investing advertisements are starting to tout strategies that short the Euro.

The weekly COT is just begging for a short covering rally.

The main question is timing. The weekly chart:
+ Price at Bollinger Band support.
+ Short term RSI (yellow) less than 30.
– Medium and long term RSI’s heading lower.
– Not much else.

The daily chart:
+ Oversold on short and mid term RSI’s
+/- Good volume on green candle, but not very good volume.
– Not near any obvious support.

The USX (about 60% the inverse of the Euro) seems to be at a turning point.

The strategy is to keep buying inexpensive calls with 2-3 months time on big down days. If the Euro gets a short covering rally, one call should pay for all the rest.

Update June 23: Sold on Thursday -82%. Price is not shooting up like I would expect. I did not handle this trade well. I should have either bought far out of the money calls to begin with or near the money and got out when price started down again.

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