Today on this segment of "Strategies For Your IRA" Tom Sosnoff and Tony Battista examined the Euro Currency ETF (FXE).
Under global expectation of potential turmoil in Greece, the Euro currency market has experienced large swings over the past few months. This has pushed up the implied volatility of the Euro Currency ETF (FXE) close to three year highs and the implied volatility rank to 100%. This presents us with an opportunity to sell premium. With a neutral assumption on FXE, we are looking to enter an iron condor strategy. Tom said, "It's hard to move currency volatility but if you think about it right now there is hope out there. If FXE and other currencies can get to 100% IV Rank, so can the S&Ps, and almost overnight."
Tom and Tony sold the July iron condor in FXE consisting of a short $113/$115 call spread and a short $106/$108 put spread for a total credit of 0.88. This trade has a defined risk. Tom mentioned that this was a "non-directional delta neutral trade." Tom further noted that they shorted this iron condor for a high credit enabling them to offset their transaction costs (commissions).
Tom and Tony said that they needed more short premium in their account. They used the same short strikes as the FXE iron condor and shorted the July $113/$108 strangle for a credit of 1.90. This trade has an undefined risk so it is for non-IRA accounts.
Watch this segment of "Strategies For Your IRA" with Tom Sosnoff and Tony Battista for an interesting strategy to use.
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