FxWirePro: EUR/CAD option collar for swing trading

It's been a wild last week for financial markets, sharp declines in equity prices on Monday added to losses racked-up in the week prior. And Tuesday wasn't much better. But on Wednesday, global equity cues improved along with oil prices and the value of the loonie (after hitting respective five and ten year lows early in the week).

But for now, it is now the time for raising eyebrow for EURCAD and stay with a cautious approach to deal with pair. It is not a U turn but it would rather be the right timing the market.

Here is the strategy, write deep OTM call option + hold an ITM put option (near month Call & mid month put). The original trade view, entitled EURCAD poised for further retreat, was an opportunistic short-term idea that attempted to take advantage of large price swings in volatile markets.

The above strategy has been in our recommendation list from last one week and we are still firm on the same, that was the time when the pair started spiking up (see daily & weekly charts), thereby our shorts on deep OTM calls have fetched certain returns by initial credit received. Now the time for ITM puts with far month expiry. And from last three consecutive days the EURCAD dropped like a rock following the stronger-than-expected durable goods report.