Canada posts better than expected trade data for July month, trade deficit contracted to -2.5B from the previous 3.6B and forecasts were at 3.2B. After today's announcement of Canadian trade balance report (MoM), CAD dollar exchange rate has been bullish especially against currency peers such as the JPY, AUD, USD, and EUR.

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

As our recently posted article illustrates CADJPY’s technical trends wherein the momentum in short-term upswing was emphasized and it is likely to drag further in the days to come, on the flipside major downtrend should also not be disregarded.

Consequently, we building FX portfolio with longs positions in 2 lots of 2W ATM 0.51 delta calls and 1 lot of ATM -0.49 delta puts of 1m expiries.

Since the higher likelihood of CADJPY upswings to extend in the short run is foreseen and the major declining trend is also contemplated, we reckon option straps strategy with narrowed strikes should take care of both upswings and downswings, and yields handsome returns on the upside in the short term.

Delta of far OTM options is very small which is why we’ve chosen ATM delta instrument on call as the bullish intensity is a bit higher side. So any 1 point movement in the underlying pair would have a significant 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.

As we anticipate 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.