I shorted EUR/JPY from 154.70 level with adds , but still think that the pair may will go to 159-159.60 area before the retrace.
I did not like the behaviour when it went 15 pips against my second short. So, I just took the 20 pips gain in the part at shorted at 157.85 when it went down to 157.65 few moment ago. New resistance is at 157.80 area. Will short again if that area is revisited and if rally fails there.
We're getting a reprieve, but this thing will rocket higher if my guess is correct that we trade to SPX 1370 next week. I bought the DNT on a vol prediction, and I expect index vol to expiration to remain under SPX implieds, and JPY vols by proxy. The risk to my position is the upside barrier. The 4/4/08 161.50 NT is trading 83/100, 20%. Not something I would entertain, but it's likely to remain untouched to expiration. Not an easy hedge as solving for 1:1 risk with long spot (covering the 33bp) would entail too much risk on the hedge.
I agree with your analysis. I am following RUT/IWM/QQQQ. QQQQs went down, but IWM was resisting the decent. So I covered short options (expiring this March 31) in case of a a break out on IWM, but my reading of it is that price 70 is a major area (traded a lot of volume the recent past). I then sold April premium again when IWM went up (with EUR/JPY) back up around 70.20 which is close to high of yesterday. I am short the 73 strike on IWM. I noticed a lot of volume there as well (Atticus: do you know why of all OTM IWM April Calls strikes, the April call 73 strike has such a high volume in comparison?). I think the behaviour if the pair is good for your UBS trade. The daily trend is down, so the farther from 152.00 the best for you I think. But I think that EUR/JPY is topping in near term if it does not take 158.30 area today. I think it has topped on 5 minute charts, now I am looking at the bulls on 15 minute chart to see what they would do. Whether they will retest the highs of today (and fail?).
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How did you manage to be patient and to have this as your first post (you seem to have enrolled back in October) ? One of the reasons I trade options (sell premium is that it forces me to be patient). Forex is where I express my impatience (but I have a small account for forex), but it keeps one in tune with human behvaiour in trading. BTW: I think that you should be careful not to average the way you do. I place stops (and try to honour them). Today I came within 3 pips from being stopped out.
i just tried to find posts for EUR/JPY pair in the forums and i find this one. patience and correct MM are the keys...
No idea on the RUT calls -- I assume it's simply a matter of paper. My guess is that it was paper selling garbage calls into a bear-reversal. OT for a EUR/JPY thread, but I was reminded by Cutten of a previous DNT position I traded some months ago. It was a 1300/1600 SPX DNT with spot trading at ~1500. The prevailing offer was 20/100 ($10,000/$50,000) with a fairval figure of $8,500 due to the large delta bias and Derman-delta; as the upside otm (-)skew strike converges to atm volatility. Delta and smile risk were similar in magnitude. The trade was priced at 20/100 offer but I assumed it was materially undervalued. Neutrality was >50 points lower so I felt comfortable modeling the position using the upside strike vol basis the SPX 1600 straddle vol, as I completely discounted any downside vol risk due to intial delta-position. I any event, I priced the trade at 35/100 based upon my model inputs.
Everyone interested should keep a close eye on the XLF and LEH in particular. LEH's action supporting yen.