Polihale.com > Predictions > September 21, 2020

Discussion: In short, the models are predicting that FXE will go up. I will give this one some room to breathe. That is, instead of demanding profit within a day or two, I will hold this for a week or so to give it time. Of course, if there is respectable profit in the first few days, I won't leave it on the table. The timeframe is important when buying options. I'll give this one a lengthy expiration date.

Prediction Made: September 21, 2020 at 00:11 GMT
Issue (ticker): FXE: Invesco CurrencyShares Euro Currency Trust
FXE on Yahoo! Finance
Sentiment: LONG (bullish, prices will rise)
duration: short-term, fewer than ten days, perhaps as short as a day or two
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 ten 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 three or four weeks in the future. Sell when profits exceed 10%. In any case, close all positions within ten 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 OCT 16 2020 110.5 Call options @ 0.976 at 09:45 on September 21, 2020
(order was partially filled at one price and completed at another)
SOLD FXE OCT 16 2020 110.5 Call options @ 0.85 at 13:54 on October 9, 2020
Loss on this trade: 13%
With this trade, $1 invested in all Polihale.com predictions since August 30, 2020 would be worth...
  • $1.69 (50% of capital invested per trade)
  • $1.30 (25% of capital invested per trade)
  • $1.15 (12% of capital invested per trade)
  • $1.07 (6% of capital invested per trade)

Epilogue: update 23 September, well, geez! This one is off to a bad start. But I got into this knowing it would take some time.
update 25 September, well, my prediction is certainly fighting an uphill battle. The sentiment on Wall Street is fueling the third-worst weekly outflow on record from U.S. equities. FXE is still to complete a theoretical cycle; I'm still looking at a sharp uptick soon.
update 04 October: WELL!! You know how I warn that a major unexpected news event could invalidate the prediction? Well, Mr. Trump certainly isn't helping. I'm eager to see what the markets do on Monday.

update 09 October: This was a tough nut. It's clear that I bought too early. The spike in price still happened as predicted. I just bought a few days too soon. See the graphic below. The black lines indicate the buy and sell dates. The blue diagonal shows the rise in price. I'm still half-tempted to think FXE could rise some more next week, and make this trade profitable. But I've held it too long, and politics in the USA are making everything jumpy right now. I decided to sell at a 13% loss rather than risk holding until next week.