Ahead of today's announcement of Canadian trade balance report, CAD dollar exchange rate has been bullish especially against currency peers such as the AUD, EUR and USD. Canada recorded a trade deficit of 584.90 CAD Million in December of 2015. It is forecasted to be printed at -1.0 millions in January 2016.

On the contrary, Lonnie may gain owing only to supportive oil and gold costs had previously counteracted the Canadian Current Account flop, leaving Canadian exchange rates static.

As we anticipate a short term upswings are on the table but long term downtrend can also not be ruled out based on our technical reasoning in our previous article, we would like to position accurately and strategize using fairly priced options so as to match the trend.

Relying on our previous articles on technical analysis we advocate below option strategy that is likely to serve both speculative as well as hedging objectives:

please refer the below link for more reading:

http://www.econotimes.com/FxWirePro-AUD-CAD-to-form-bullish-engulfing-pattern-attempts-to-breach-channel-resistance-buy-one-touch-or-above-binary-calls-for-30-40-pips-172848

Since, the pair has shown robust strength especially in this week and is on verge of reversing the direction to the short term upswing minimum upto 0.9955 levels that is where it is deemed as a consolidation phase, as it is has bottomed out at channel base provided it holds and sustain above resistance levels or in other words where the spot FX price action has become tighter and where volatility would shrink away in advance of a big move in either direction. Typically, we're looking for a pennant within the context of an upward trend.

After going through the above article on technical reasoning, with IVs of 1W ATM calls at 9.86% we hope what the uptrend is intended to be at this juncture and if you compare the prevailing price of AUDCAD with the recent swings it would be more convincing.

As a result, we recommend a strategy with longs positions in 2 lots of 2W ATM 0.51 delta calls of 1W expiry and 1 lot of ATM -0.49 delta puts of 2W expiries.

Since, we anticipate upswings after 3-4 days, this AUDCAD option straps strategy should take care of both upswings and downswings, and yields handsome returns on the upside in short term.

Delta of far OTM options is very small which is why we've chosen ATM instrument on call. A 1 point movement in underling pair will not have much effect on the option premium.

Investors need to be optimistic that the volatility in the underlying pair will occur during the short lives of the options. Preferably, the movement will occur towards the leveraged side. If the hoped for price swing does occur, these strategies can be quite rewarding.