By Darrell Martin
Early Friday morning, the Federal Statistical Office in Switzerland will release the monthly Producer Price Index (PPI) reports. These reports comprise both month over month (MoM) and year over year (YoY). The reports will be released at 3:15 AM EST giving traders in the United States and excellent opportunity for an overnight trade.
Because this type of news report generally produces some amount of volatility in the market, but the direction of the movement is unknown, the Iron Condor is a good strategy to employ. This strategy is utilized by simultaneously buying and selling two Nadex USD/CHF spread contracts.
One spread is bought below with a second sold above where the market is currently trading. The ceiling of the bought spread should meet the floor of the sold spread and be where the market is trading at the time of entry. The Iron Condor strategy profits when the market ranges or makes a move and then pulls back. Additionally, the range in which the market can settle and the trade can profit is quite large.
The beauty of using CFTC regulated Nadex spreads is the built-in defined risk, which is defined before entering any trade. There is never a margin call or the chance of being stopped out.
For this particular trade, enter as early as 11:00 PM EST Thursday, the evening before. Use the 7:00 AM EST expiry. Minimum profit should be $35 with each spread having a profit potential of at least $17. . Using the scanner makes it easy to find the spreads to meet the parameters of the trade. If the specifications cannot be met, there is no trade. Never force a trade.
Below is an image of the scanner showing USD/CHF spreads. The arrows indicate where to find the potential rewards for each side, whether buying or selling as well as the contracts available for the different expiration times. The bottom arrow shows a filter where you can specify your potential reward.
This is a low risk trade. It can be put on the night before and then not checked until morning. However, once place, risk can be further managed by placing stops at the 1:1 risk/reward ratio points where the market would hit 70 pips above or below where it was at entry. As long as the market settles between the breakeven points of 35 pips above and below where the market was at entry, some profit will be realized. The greatest profit will be made if the market settles right between the two spreads.
Visit Apex Investinghttp://www.apexinvesting.com for access to the scanner and free day-trading education.