A strong Yen this morning will not make money for the S&P 500 and will likely begin reigning in the S&P 500 gains given at the open. Earnings season continues to generate trading opportunities. Overnight weakness in the Yen makes allowances for some of the bounce off of Friday’s lows but post-US open
forex trading is indicating a reversal is in the cards. Strong euro overnight and at open is opposing the Yen move and appears dominant for the moment. I am watching for rising VIX and euro turn (weakening) as confirmation.
Early Forex Trading in Yen Throws Us Our Bone
Well the forex trading in Yen was kind enough to throw us our bone in the way of an intra-day peak in the S&P 500. We had our pick in at S&P about +0.6% on the day from which it has fallen to about neutral at noon EDT. We’ll be watching the Yen for weakness (not counting on it at this point) or falling VIX from this point (anything can happen there) as a signal to run our binary option hedge and will otherwise stand pat and ride out the day. Hope you are hitting your marks as well.
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Tags: binary option hedge, Forex Trading, Make Money, S&P 500, USD, yen
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I can’t speak for how readers did yesterday but we nailed it on the head. It isn’t often we visualize how daily markets are going to move and watch it unfold exactly as we had seen it… but yesterday played out EXACTLY as we thought it would. Even though our binary options hedging with call and put trades looked in jeopardy in mid-afternoon the market caved and fell right in the sweet spot.
The greatest thing about using binary options in a hedge and double trade is once you buy the second side of the trade you can walk away and go enjoy life… which is the purpose of making money after all, isn’t it?
What exactly did we see yesterday? As we talked about in the title of the post – the Yen was strong in forex trading and that typically means the S&P 500 is in the process of dropping. The market had opened up around 0.5% and floated up to a little over 0.6% positive by the time the 10am hour came around. This is when I am usually paying very close attention to the market as all the “opening mayhem” has usually cleared the system by 10am. Forex trading in Yen was still pointing UP so we made the point that this was the time to get in our put side position (binary options put on SPY). Sure enough the market followed the forex signal down with S&P 500 eventually hovering around break-even for the day. This created a 0.6% spread for our binary options hedge and double trade, so that was the time to buy the call side of the trade and walk away.
Wouldn’t you know it the market settled just below our top side, leaving both put and call positions ending in the money – despite intra-day swings (on both sides) that fell out of the money on one of the contracts at one time or another. These days given the dearth of real retail volume – the markets gravitate back toward the open – failing huge turns in the forex trading. We saw gravity in full force yesterday. The market couldn’t motivate retail trading activity so it settled practically where it opened (for retail traders). Who’d have thunk it, right?