FxWirePro: GBP/AUD uptrend remains intact, credit call spreads for swing trade and call backspreads for hedging

We believe GBPAUD uptrend has been quite healthy as the upswings are moving with considerable corrections at the right time, it has neither been steep spikes nor steep declines.

Speculate with credit call spreads:

On speculation grounds, buy next month (September 1%) out of the money 0.48 delta call options, simultaneously sell near month (August expiry -1%) in the money call.

This spread strategy is to be employed because we think that the price of GBPAUD should consolidate moderately in the near term, as we anticipated a short term downswings the premiums collected on In-The-Money calls can be pocketed in.

Hedge Perspectives: Call backspreads

Since moderately bullish trend is anticipated in medium term so we set a target price for the bull run to go beyond 2.1575 levels and utilize bull spreads to reduce risk. While maximum profit is capped for these strategies, they usually cost less to employ.

Buy 2M (2%) 2 lots of out of the money 0.28 delta calls, on expiry that would discount everything high impact news scheduled in September month while shorting 15D (-1.85%) in the money calls. We maintain these (ITM & OTM) levels in our strategy by keeping global macroeconomic aspects such as Fed's rate hike and BoE's speculation that may have adverse impact on this pair.

Maximum loss for the call back spread is limited and is taken when exchange rate of GBPUSD at expiration is at the strike price of the long calls purchased. At this price, both the long calls expire worthless while the short call expires in the money.