Friday, 8 February 2008

Another $3,800 to the good guys

Well, my GBP/USD 1.95 straddle just rolled off, and I covered the outright short I had on as well.

I'd sold the 1.95 straddle back on January 22nd for 417.1 cents, in £5/cent or £2,085.50 in premium. It just expired for 52 cents, giving me a profit of £1,825 = $3,550.

I'd also took 24 cents out of my outright short, for a profit of £120 = $233.

Sweet. After my 1.98 straddle expired at a great level last week, the market then sells off down to my level for this week's expiry! Doesn't get better than that.

Lots of opportunities in FX. I missed shorting some HUF (Hungarian Forint) since I kept waiting for a better entry, and I didn't put the GBP/AUD short back on, and I didn't put an outright Euro short on or sell some more calls. But once I stop being such a f*cking bottler, I'm going to nail a few more of these. I think the USD is the one to think about. I could see a big rally against the major currencies, but the US really does have some major problems. The biggest issue in the relative housing markets between the US and Europe is that it is SO easy for people to walk away from homes in the US. Ever since that mortgage relief act was signed last year, you can now walk away with no tax liability. So all the banks are going to get royally f*cked. There is just no avoiding it. So if we really think currencies will move based on relative growth differentials and interest rate differentials, it would suggest that the dollar is set to deteriorate further.

Against that, I think the optimism in the UK and Europe over the last year has been unjustified, so these currencies could do with getting a bit of a kick-in.

I'll probably still be a seller of EUR and GBP on rallies, but I'm having a good thing about changing that plan.

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