Market: Euro, 6E, EC, $6E_f —Buy or Sell?: Seasonal strength should be near in the Euro and puts seem a little over-priced; sell the October 128 puts for about 37 ticks or $462.50.Range: We suspect support in the Euro will be found near the 100 day moving average ($1.3140ish); if this level fails we should see support near $1.30 and then again near $1.2880.
Sell October Euro 128 puts
According to the Commodity Trader’s Almanac; going long the Euro on or near September 9th through about October 1st has yielded a profit in 11 of the last 13 years. Although seasonals suggest it might be a little early to begin establishing bullish Euro trades, the chart and put premium hint that this might be an opportune time to begin nibbling. Should the Euro continue to fall, we can consider adding to the position at better prices.
We like the idea of selling the October Euro 128 put for about 37 ticks. This option has 32 days to expiration, so it stands to lose value quickly if we are right about a Euro bounce. It is also positioned nearly 400 points under the market, and near what has been swift support for all of 2013. This option was trading under 15 ticks last week and has more than doubled in value; the quick gain in premium will promote rapid erosion if Euro selling dries up.