Time to Adjust FXE and USO Positions?

  • SumoMe

In recent articles I wrote about “example” trades in the Euro (using ETF ticker FXE) and crude oil (using ETF ticker USO).  Given the state of the US Dollar it might be time to look at adjusting those positions.

The Euro (ticker FXE)

In this article I highlighted an “example” trade for FXE using the “backpread” strategy.

Figure 1 displays the original position form the original article.1Figure 1 – Original FXE risk curves (Courtesy www.OptionsAnalysis.com)

Figure 2 displays the position updated through 1/24/18.2 Figure 2 – Original FXE position as of 1/24/2018 (Courtesy www.OptionsAnalysis.com)

Figure 3 displays one possible adjustment.3Figure 3 – FXE position adjustments (Courtesy www.OptionsAnalysis.com)

Figure 4 displays the risk curves for the adjusted position4Figure 4 – Risk curves for adjusted FXE position (Courtesy www.OptionsAnalysis.com)

The key thing to note is that after the adjustment the remaining position still enjoys unlimited profit potential and the “worst case scenario” is a profit of +$766.

Crude Oil (ticker USO)

In this article I highlighted an “example” trade for USO using the “backpread” strategy.5Figure 5 – Original USO risk curves (Courtesy www.OptionsAnalysis.com)

Figure 6 displays the position updated through 1/24/18.

6Figure 6 – Original USO position as of 1/24/2018 (Courtesy www.OptionsAnalysis.com)

Figure 7 displays one possible adjustment.7Figure 7 – USO position adjustments (Courtesy www.OptionsAnalysis.com)

Figure 4 displays the risk curves for the adjusted position8Figure 4 – Risk curves for adjusted USO position (Courtesy www.OptionsAnalysis.com)

The key thing to note is that after the adjustment the remaining position still enjoys unlimited profit potential and the “worst case scenario” is a profit of +$530.

(See also U.S. Dollar – Breakdown or Bear Trap?)

Jay Kaeppel

Disclaimer:  The data presented herein were obtained from various third-party sources.  While I believe the data to be reliable, no representation is made as to, and no responsibility, warranty or liability is accepted for the accuracy or completeness of such information.  The information, opinions and ideas expressed herein are for informational and educational purposes only and do not constitute and should not be construed as investment advice, an advertisement or offering of investment advisory services, or an offer to sell or a solicitation to buy any security.

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