By Darrell Martin
The numbers reflecting the change in the price of goods and services consumers purchased from the previous month comes out Tuesday, March 24, 2015. The Bureau of Labor Statistics releases the CPI which shows the change in the price of goods and services which in turn shows if there has been inflation since the last report. This is important to currency valuation due to the central bank possibly raising interest rates in consideration for their inflation containment mandate. At 8:30 AM ET on Tuesday the Core CPI will also be released. This is the same report, but different in that it excludes food and energy which accounts for approximately one quarter of the CPI, Consumer Price Index.
Enter As Early As 8:00 AM ET
Its been researched by Apex Investing that once these reports are released, the EUR/USD moves approximately 25 pips and pulls back, making for a trade opportunity using a neutral strategy like the Iron Condor. To set up this strategy you can use Nadex Spreads, a derivative of the underlying market EUR/USD. At 8:00 AM ET you can enter for a 10:00 AM ET expiration. The Iron Condor should have a profit potential of $25 or more or there is no trade opportunity. It is quite possible also to have more profit potential than $25 in the spreads.
Buy the lower spread with the ceiling being where the current underlying market is trading and sell the upper spread with the floor being where the current underlying market is trading. Once the reports come out the market will move and then pull back. If it pulls back to between your two spreads you will make max profit. A max profit of $25 may seem low; however, you can trade more spreads on each side, just be sure to keep the sides equal.
Leave On Until Expiration
Leave your Iron Condor on until expiration. This will give the market plenty of time to retrace back to between your Iron Condor spreads. If you place your spreads on with a combined profit potential of $25 between the spreads, the market would have to move 50 pips in one direction and remain there until expiration for a full $25 loss. For a breakeven outcome the market would have to move 25 pips in either direction and remain there until expiration. Depending on what you bought and sold your spreads for, the market could move approximately 12 -13 pips in either direction and remain there until expiration. You would profit on one side and break even on the other. Again, if the market moves and pulls back to between the spreads then fluctuates slightly there until expiration, that’s where you make the greatest profit.
Nadex is now open for people in 49 countries to trade its derivatives. Apex Investing provides a calendar with researched news events and strategies weekly at www.apexinvesting.com.