FxWirePro: EUR/GBP short options combo to replicate short spot FX

Are you looking out for shorting EURGBP for profit maximization, yes you can very well do the same using derivative instruments so as to leverage extraction. We nearly replicated the short spot FX position by buying OTM puts and selling OTM calls. The net result is a virtually nil cost or even net credit trade that has uncapped risk potential as the EURGBP rises.

EUR/GBP spot FX is currently trading at 0.7330. Buy 2M 2% out of the money -0.49 delta puts and simultaneously sell 2% out of the money calls (strikes 0.7470) with shorter expiry (probably 7, 10 or 15 days time frame).

Rationale: With below technical reasoning, use this strategy as EUR/GBP long term bearish environment holing strong despite intermediate attempts of bulls taking over rallies and wish to earn capital gains.

Advantage: With this strategy, you use no capital or negligible capital and yet are able to simulate a short spot FX position, and the ability to leg in and leg out as you wish.

Risk/Reward Profile: The risk is uncapped if the pair rises towards north, while the reward equals lower strike plus net credit, or less net debit.

Technical Roundup:

Long term technical charts do not trace any clear buying signals at all. This pair had taken a brief pause while a slight recovery took place from mid July, bounces from 0.6935 to 0.7420 levels. Intraday sentiments are also bearish bias and leading indicators fortify these downswings with downward convergence. Things seem like taking track back onto its usual business on GBP side, the pair continues to flow its long lasting loses and held sturdy in near future.