FxWirePro
Short

EUR/CAD collars to derive +ve cashflows irrespective of swings

FX:EURCAD   Euro Fx/Canadian Dollar
163 0 2
We had earlier also traced out bearish indications to head towards 1.4355 and even the levels up to 1.4150. As the highs of 1.4387 are once again rejected at trendline resistance (see circled area).

For now the pair is the most likely to retest 1.4182 contemplating significant support for bulls at these levels. We believe if it holds these levels then healthy bounce back may happen otherwise the declines until 1.3979 is also possible (i.e. previous channel distance).

If you predict Euro             to spike up against Canadian dollar             , then cover your underlying currency exposures with collars strategy.

This strategy is for those who have Euro             exposure at present who are concerned about a correction and wish to hedge the long spot currency position. So, how do you do that? The hedger takes following positions to construct this strategy:
Write an OTM call option + hold an ITM             put option (prefer shorter expiry on call writing / near month Call & mid month put)

This helps as a means to hedge a long position in the underlying outrights by holding longs on protective put.

Thereby, any declines in this pair would be taken care by ITM             put options since the holder of the put option will have right to sell at predetermined strike price at expiry in case of European style options.

Maximum return = Strike price of call - Currency spot FX - net premium paid.
Ideas Scripts Chart
United States
United Kingdom
India
España
Italia
Brasil
Россия
Türkiye
日本
한국
Home Stock Screener Economic Calendar How It Works Chart Features House Rules Moderators For the WEB Widgets Stock Charting Library Priority Support Feature Request Blog & News FAQ Help & Wiki Twitter
Private Messages Chat Ideas Published Followers Following Priority Support Public Profile Profile Settings Billing Sign Out