We are trading contracts in the Australian Dollar (XDA) put options. This is the AUD (Australian Dollar) against USD (US Dollar) FOREX instrument that is traded in the Philadelphia stock exchange. We are buying put options which means we expect the AUD to fall against the USD.
The AUD has been moving up nicely over the last few months and we have collected our trading gains on the currency. But we do believe the tide is turning a bit especially with the “cooling” plan that China has indicated recently. Our expectation is for the AUD/USD FOREX pair to fall to around 0.8730 first and then potentially go all the way down to 0.8360.
We are buying the March 90.50 puts at a premium of $234 per contract. We expect this trade to be closed sometime in February 2010 for a nice gain in the premium.
Note: Options traders should note that the new options contract naming has gone into effect and every broker may have their own naming convention. My broker’s naming convention is quite easy. For this trade it is XDA100320P90.5 which can be translated to SYMByymmddP90.5 (where P stands for put and 90.5 stands for the strike price).
We will provide update here on how we did with this trade.
Sponsor: Morningstar Stock Market Research
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