By Darrell Martin
At 4:30 AM ET, Friday, December 8th, the Office for National Statistics, UK, as well as the Bank of England will release nine reports in total, which might impact trading. These reports vary in importance between low to high. They concern topics including Industrial and Manufacturing Production, Inflation Expectations, Trade Balance and Construction Output. In varying ways, these reports gage changes happening with the United Kingdom’s economy. As a result, the reports may both affect the market and offer a trade setup.
News reports usually cause both movement and volatility in the market. Reactions to these types of news generally begin with movement in the market followed by a pullback. However, the direction of movement remains unknown.
Setting up a trade to collect premium and possibly profit regardless of market movement is potentially advantageous to the trader. An Iron Condor setup uses two Nadex GBP/USD spreads. One spread is purchased below the market as another spread is sold in sync above the market. The ceiling of the spread purchased ought to meet the floor of the spread sold and, at the time of entry, be where the market is trading.
A Premium Collection Trade
With this strategy, the market may fluctuate up or down and when it pulls back toward the center between spreads, both spreads can profit as time expires. This results in a collection of premium.
This image offers an example of how spreads can profit or lose, dependent on market performance at settlement.
Risk can also be maintained further to remain a realistic 1:1 risk reward potential. Nonetheless, there is no additional risk beyond the floor and the ceiling of spreads.
With an early release time, this trade type can be entered once the 7:00 AM ET expiring spreads become available for trading, occuring at 11:00 PM ET on Thursday, the night before the release. This is a good trade to demo and gain familiarity with market reactions concerning news events and Nadex spreads.
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