The German Business Expectations Index, which measures attitudes toward business prospects over the next six months, increased to 102.4 this month from 102.1 in June, compared to estimates for a reading of 101.8. The monthly index is based on a survey of around 7,000 German firms in the manufacturing, construction, wholesale and retail sectors.
In a report, the German research institute, IFO said its Business Climate Index rose to a seasonally adjusted 108.0 this month, up from a reading of 107.5 in June and beating forecasts for 107.2.
As a result, EUR/JPY rose from 135.872 to 136.358; while EUR/USD was trading at 1.1101 from around 1.1088 ahead of the release of the data, while EUR/GBP was at 0.7152 from 0.7148 earlier.
Those who expect the underling currency to make a large move higher, then the strategy can be established as follows:
Purchase more number of calls and sell fewer calls of a lower strike usually in a ratio of 2:1. The lower strike short calls finances the purchase of the greater number of long calls and the position is entered for no cost or a net credit.
The Euro has to make substantial move on the upside for the gains in long calls to overcome the losses in the short calls as the maximum loss is at the long strike. Give stock longer time to expiration so as to make a substantial up move.
