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FXY (JPY) Signal - Apr. 1, 2013

By Andrew Keene
Andrew Keene spent 10 years as an independent equity options trader on the Chicago Board of Options Exchange, during which he spent the majority of his time as a market-maker for over 125 stocks. Andrew currently trades futures, currencies and commodities. When he's not trading, Andrew appears on top business television shows including CNBC's Squawk on the Street, Street Smart on Bloomberg TV and First Business, a show that is syndicated across the United States. Andrew graduated from the University of Illinois with a degree in Finance with a concentration in Accountancy.

By: Andrew Keene

The CurrencyShares Japanese Yen Trust (FXY) is an exchange-traded fund, which tracks the price of the Japanese Yen as an alternative to investing in the foreign exchange market. FXY is currently trading at $104.63 or 3% above its 52 week low of $101.57, and -11.17% below its 200-day moving average. Japanese stocks retreated today and the Nikkei 225 Index ETF, NKY, has gapped down -$0.34 or -2.15%. The Nikkei 225 is down today as investors await a key rate decision on Thursday by the Bank of Japan. On Monday Japanese investors were selling shares on the belief monetary easing was already priced into the market.

The US dollar (USD) has seen a large run up in buying power over the Japanese YEN with a 36% increase since its low of 77.1300 in late September. Since then the USD has hit a high since 2010 against the JPY at 96.7100 and fallen to 93.51 with possible resistance at 92.000, and strong resistance at 84.000 at the last gap in late December which will be looking to close. FXY is also posting high volatility compared to the other CurrencyShares ETF’s, which is a possible bearish signal for the intermediate term.

The Trade:
Selling the FXY April 105-106 Bear Call Spread for $.45 credit
Risk: $ .55
Reward: $.45
Breakeven: $ 105.45

Greeks of the Trade:
Delta: Short
Gamma: Short
Vega: Short
Theta: Long

Andrew Keene
About Andrew Keene
Andrew Keene spent 10 years as an independent equity options trader on the Chicago Board of Options Exchange, during which he spent the majority of his time as a market-maker for over 125 stocks. Andrew currently trades futures, currencies and commodities. When he's not trading, Andrew appears on top business television shows including CNBC's Squawk on the Street, Street Smart on Bloomberg TV and First Business, a show that is syndicated across the United States. Andrew graduated from the University of Illinois with a degree in Finance with a concentration in Accountancy.
 

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