FXE Analysis

CurrencyShares Euro ETF (FXE)

Update 2/13/2018: FXE reversed in what appears to be a counter-trend correction, joining the blue-chip stock indexes a few days late. I exited for a loss at $1.07 on the options position with shares at $118.84.

Shares rose by 1.1% over three days, or a +130% annual rate. The options position produced a 32.87% loss for a -3,978% annual rate.

I won’t re-enter until the dominant downtrend resumes. A move above $120.65 would mean that the downtrend was a head-fake and that the dominant trend is a continuation of the uptrend that began in December 2016.

I have entered a bear call vertical spread on FXE, using options that trade for the last time 35 days hence, on March 16. The premium is a $0.70 credit and the stock at the time of entry was priced at $117.58.

I made the decision to enter the trade in my account based on the trend as measured by the Fisher Transform and based on Elliott Wave analysis.

This position continues series that began Oct. 26, 2017

Implied volatility stands at 11%, which is a third of the VIX, a measure of the volatility of the S&P 500 index.

FXE’s IV stands above 59% of the symbol’s IVs of the past year, and at the peak of its most recent broad movement.

The price used for analysis was $117.56.

Premium: $0.70 Expire OTM
FXE-bear call spread Strike Odds Delta
Long 120.00 75.2% 26
Break-even 117.29 64.5% 37
Short 118.00 53.8% 47

The premium is 71% of the width of the position’s wings.

The risk/reward ratio is 1.8:1.

The bid/ask spread was 7.0%.

By Tim Bovee, Portland, Oregon, Feb. 9, 2018


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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