Polihale.com > Predictions > September 4, 2020

Prediction Made: September 4, 2020 at 11:16 GMT
Issue (ticker): FXE: Invesco CurrencyShares Euro Currency Trust
FXE on Yahoo! Finance
Sentiment: LONG (bullish, prices will rise)
duration: short-term, fewer than four days, perhaps as short as intraday
expected profit: 1% to 2% in issue price; 5% to 20% with call options

How To Trade This Prediction

Note: all bets are off if there has been a major unexpected news event since the prediction

Less-Aggresive, Less-Risky trade:
Buy some shares of FXE at the next opening bell. Consider selling at least half after they increase 1% in value. In any case, sell it all within four days as this prediction does not go beyond that.

Aggressive and risky trade:
Buy call options of FXE at the next opening bell. Pick a strike price that's nearly At-The-Money (ATM). Pick an expiration date that's two or three weeks in the future. An extremely aggressive and profitable trade (but very risky) would be to pick an expiration date only a few days away. Sell when profits exceed 10%. In any case, close all positions within a few days.

Some options are lightly traded at the opening bell which results in a large spread between the Bid and Ask prices. That's a bad time to buy. Sometimes the only way to get a reasonable price is to wait a few minutes until the Bid and Ask start converging.

Actual Performance:

BOUGHT FXE Sep 11 2020 111.0 Call options @ 0.67 on September 4, 2020 at 09:35 EDT
BOUGHT FXE Sep 18 2020 111.0 Call options @ 0.88 on September 4, 2020 at 09:35 EDT
SOLD all Sep 11 2020 options @ 0.82 on September 4, 2020 at 14:50 EDT (+22.4% gain)
SOLD 86% of the Sep 18 2020 options @ 1.05 on September 4, 2020 at 15:47 EDT (+19.3% gain)
SOLD the remaining 14% of the Sep 18 2020 options @ 0.96 on September 4, 2020 at 15:58 EDT (+9.1% gain)
Overall gain from this trade: +20.0%

With this trade, $1 invested in all Polihale.com predictions since August 30, 2020 would be worth...
  • $1.73 (100% of capital invested per trade)
  • $1.34 (50% of capital invested per trade)
  • $1.21 (23% of capital invested per trade)
  • $1.14 (9% of capital invested per trade)

Epilogue:

I was very tempted to keep the options until next week. I expect a rally. But with 20% gains for the day, I closed it all before the closing bell. I sold the September 11 options first because there is less than a full week left before expiration.