OPTIONS EXPIRATION WEEK RESULTS IN 100-PIP MOVE FOR USDJPY

Last week was Options Expiration Week. And those who attend that FXOptions classes know that Options expiration is a time to look for opportunities to trade forex based on the market moves (Dow or its ETF DIA). Options Expiration typically results in strong move (either Up or Down), with about 70% to the Upside (although it has been Up-Down-Up-Down lately). This week, there were 3 clear "Hammers" on the DIA, which clearly showed (look below) that the path of least resistance was Up on Options Expiration day. And this is what happened with the USDJPY pair. (Note: We used to trade EURJPY instead of USDJPY, but with the Euro susceptible to downdrafts, it was not the preferred vehicle this time round).




















Chief Shook

IS IT TIME TO TAKE A BITE OF THAT APPLE?

Apple, ah, that company which makes the must have iPhone and Macbook. That company which keeps on confounding analysts by growing and growing (like Blackberry behemoth Research in Motion). So is there a way to play Apple by using Options? What about playing Apple by using Options listed on the KLSE? Seems there is. The picture below shows some Vital Statistics on Call Warrants listed on the KLSE - namely Google, Apple and Exxon-Mobil.















(Click to ENLARGE. Source: The Star, 22nd December 2007)

With a conversion price of US$171.50, requiring 1,200 warrants to convert to one mother share, and a last transacted price of RM0.09 (reference price of RM0.08), we come to a "hurdle" price of US$200 per Apple (APPL) share for the Call Warrant to be profitable. Apple traded at US$193. Here's a fact. Apple shares do tend to rise up in January before the MacWorld later that month. And seeing Research in Motion (RIMM) blow away earnings expectations (again!) really gives this trade a good set-up. The Call Warrants expire on July 4th, 2008 providing ample time for profits, provided Apple (and the technology sector in general) performs. Look at RIMM to see how these stocks can soar.....

Chief Shook

WE'RE STILL WAITING FOR THE SANTA CLAUS RALLY ON THE DOW, BUT SANTA HAS ALREADY GIVEN US A GIFT (USDNZD)

The markets took a nosedive after the Fed interest rate announcement, clearly unhappy with the Fed Chairman's decision for a 0.25% rate cut, instead of the expected 0.50%. So did Bernanke become the Grinch who stole Christmas? This is why we play in multiple markets. For as Santa has been quietly holding back on the Stock (and Options) market, he has been magnanimous in the Forex market. The USDNZD has been one of the really clear patterns which has already given us 100+ pips (since my alert on Tuesday and subsequent SMS on Thursday, to FXoptions members). It has been quietly developing a channel for the past one month, and is now clandestinely working its way back up after hitting the downtrend of the channel (which also coincides with the bottom of the Bollinger Band and the 100-Day SMA). So we will have a merry Christmas after all!

(Click on Chart to Enlarge. Generated using Accucharts)


Chief Shook

WHAT IS THE AUSSIE WAITING FOR?

My favourite pair has always been the Aussie Dollar. I think it's the most easiest pair to trade, alongside the USDJPY. But trying to trade the Aussie recently would have given you a case of acute migraine (if you didn't already have one). Looking at the Charts of the Aussie below, the Aussie at the the bottom of what could slowly be a Head and Shoulders formation. But it doesn't look like it wants to break down (unlike the Euro and Cable, which fiddled with the bottom of their downtrend channel before breaking down, in all their glory).











So what's up, mate? Everyone knows about the Aussie's close correlation to Gold, so maybe we should look at the chart for Gold to give us some clues on the impending breakout of the Aussie. It is obvious from the chart of the GLD (the Gold ETF) that Gold is slowly consolidating in what is termed a rising wedge pattern. Gold is waiting to break up to the upside (or downside) once it completes the wedge pattern. Only when Gold breaks out should we see the Aussie finally do something, fulfilling its promise as an easy pair to trade. Intermarket analysis on other correlated assets gives us clues to help in our Forex trades.




Chief Shook