FxWirePro: AUD/JPY combinations over naked puts still better choice for leverage benefits

The trade balance of Japan for May month posted another deficit, albeit small at ¥ 0.18tln and down from previous ¥ 0.24tln deficit in April.

Both export growth (2.4%) and import growth (-8.7%) were declined than expected on YoY terms.

The economic recovery in the US and China remains weak, and Japan's exports are not yet showing strength.

Since this strategy with 2 legs combination, the execution should be as shown in the diagrammatic representation with accurate time frame and right Greek mathematical computations.

We recommend buy 7D (+0.1%) Out-Of-The-Money 0.46 delta call options from current levels.

Simultaneously, short build ups on (-0.05%) Out-Of-The-Money puts of the same pair and same expiry are also suggested.

With a view slight bullish view on this pair, we tried to extract leverage by shorting OTM put and then utilized the same for slightly above ATM calls which are likely turn out to be In-The-Money.

It may highly risky as the strategy contains naked put positions but OTM put with 7D expiry go worthless if it moves upwards.