Tuesday, August 10, 2010

Late night snack?

I've banned my family from the house, and am delaying my attendance at this afternoon's festivities at the beach to sit in front of my screen for a couple of hours.  I think the Fed meeting announcement may offer the opportunity to pick up (or give away) a few quick dollars on a trade.

The run-up in stocks, run-down in Treasury yields, and decimation of the $ over the past weeks may have something to do with the expectation of QE part deax.  If there is no announcement of such this afternoon, we could see a nice reversal.  Even if there is an announcement, it could be a "buy the rumor, sell the news" type moment.

How to play it the possibility that there is no QEII announcement... a few possibilities.  One would be the buy the DX or calls on the DX.  Another might be to sell T-bonds or puts on T-bonds ...

Okay, thought about for a minute and bought some puts on T -bonds and sold short some AUD vs the USD.  I like the risk/reward here.
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Update at 9 AM on Wednesday ...

Covered the AUD short at a 50 pip profit and the T-bond puts at a small loss.  Made enough to buy a a few dozen top-necks for dinner and then take the kids out for ice cream tonight!

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