Profit on the Greenback Slide

The trade I am looking at is simple. I will continue to look to get "short deltas" via short call-spread positions. On any rallies by the loonie into this resistance zone around 9400, I will be looking to sell front-month options.

In this case, I am fairly comfortable selling a close to the money strike. For example, the 95/100 call spread. I will be looking to collect a minimum of $700 per spread. The max risk on this trade is $5,000 minus what we collect in premium.

Currently the front month options contract is October and it expires on Oct. 9. This means that an option seller's best friend-theta, otherwise known as time decay, will be quite rapid at this point.

Should my analysis be incorrect and the loonie does in fact rally above resistance, I will exit the position if it reaches the short strike at 9500.

Good luck in your trading, and remember to trade with your head, not your heart!

Risk disclosure: Past performance is not indicative of future results. the risk of loss in trading futures and options is substantial and such investing is not suitable for all investors. an investor could lose more than the initial investment.

-- Written by Matthew J. Zeman in Chicago

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