1. How did you express your short USD/JPY position? Futures? Options? CFDs? Asking because 3.9% P&L surely doesn't take into account negative carry, especially if you entered the position at the end of November.
2. I find your Euribor trade quite aggressive. Have you factored in recent lending data in Europe? Already contracting and TLTROs redemptions will further shrink CB balance sheet.
In Nov I bought low delta 3m and 5m puts (listed futures options), which was I able to monetize in Jan and Feb. took some premium off the table and rolled into Aug 25 delta puts. I also captured some of the downtrend by tactically buying jpy futures on dips taking profits on rallies.
I am aware of the negative carry, which is larger now, and will factor it into the return when I close out the trade.
Lending and the Fed balance sheet have also been contracting in the US but inflation hasn’t slowed as quickly as expected. I expect Europe to be similar- they aren’t throwing enough at inflation to stop it. I think the ECB is in a similar place as the Fed in Q2 2022 when they were behind the curve and had to hike in large increments every meeting. AND at the time inflation hadn’t topped yet so there was no end in sight.
Two questions if I may:
1. How did you express your short USD/JPY position? Futures? Options? CFDs? Asking because 3.9% P&L surely doesn't take into account negative carry, especially if you entered the position at the end of November.
2. I find your Euribor trade quite aggressive. Have you factored in recent lending data in Europe? Already contracting and TLTROs redemptions will further shrink CB balance sheet.
In Nov I bought low delta 3m and 5m puts (listed futures options), which was I able to monetize in Jan and Feb. took some premium off the table and rolled into Aug 25 delta puts. I also captured some of the downtrend by tactically buying jpy futures on dips taking profits on rallies.
I am aware of the negative carry, which is larger now, and will factor it into the return when I close out the trade.
Lending and the Fed balance sheet have also been contracting in the US but inflation hasn’t slowed as quickly as expected. I expect Europe to be similar- they aren’t throwing enough at inflation to stop it. I think the ECB is in a similar place as the Fed in Q2 2022 when they were behind the curve and had to hike in large increments every meeting. AND at the time inflation hadn’t topped yet so there was no end in sight.
Thanks for taking the time to reply. Much appreciated.