Any further Euro dips likely? Arrest the slumps though spreads

The euro fell below the USD 1.10 mark yesterday after the Greek government said it would hold a referendum on its bailout negotiations but recovered massively during the course of the day, thereby opening the possibility that the country could fall out of the euro zone.

However, we are quite certain of the creditors being able to get a new proposal to the table and hence expect the euro's fall to be arrested soon.

The euro seemed weaker in Asia on Tuesday as the final day of the Q2 and the month of June has placed all eyes on Greece as the government looks well equipped to default on sovereign debt obligations.

Thus, this probable risky occurrence can be arrested though "selling credit call spread (bear call spread)".

Currency Derivatives Insights:  
Option Strategy: Bear Call Spread (EUR/USD)

In order to establish the above stated strategy, hedgers should focus on selling ATM or ITM call option and purchase another call at a higher strike price for a net credit.

Use this call spread as the expectation of exchange rate of Euro to move lower or sideways so that the calls expire worthless and you keep the entire premium.

Bear Call Spread is better over short calls since it has limited risk unlike unlimited risk in case of naked short calls.

Use a shorter maturity to take advantage of the time decay and give the underlying currency less time to go against you.