FxWirePro: AUD/NZD strips yield maximum profits but focus on PRBS that keeps tight hedging

Both weekly and monthly graphs suggest bearish signals, the pair is currently trading a way below 10 day moving average at around 1.0959 levels.

More importantly a long real body bearish candle occurred at 1.0924 with huge volumes. Leading oscillators like RSI and slow stochastic curves converging according to the price dips and rises, but little bias towards south. RSI is currently 52.1611 and %D line is at 55.4096 and %K line at 44.3822 on slow stochastic.

Put Ratio Back Spread: AUD/JPY

On 13th at around opening price 1.1136 levels we advised option strips (1 call of 7 days expiry and 2 puts of 1 month expiry), now look at the circled position at this juncture on above technical charts. Our both call and puts have optimally shown their results. But for now, with the above technical reasoning, we recommend arresting further downside risks of this pair by hedging through Put Ratio Back Spread.

The reason for depleting strips and deploying back spread is that it is proportionately less chances of spiking in short run, but to mitigate any abrupt upside risks and safeguard our targets downside 2 out of the money puts are suffice with 1 short.

Expect the underlying currency exchange rate of AUDNZD to make a larger move on the downside.

Thus, purchase 1M 2 lots of At-The-Money -0.52 delta puts and sell 1M one lot of (1%) In-The-Money put option. The short ITM puts funds to the purchase of the greater number of long puts and the position is entered for no cost or a net credit. The delta of combined positions should be around -0.38 with slightly negative theta value.