Quote from Daal:
What are your thoughts on my theory?My read on the situation is that once the default has been accepted(by the modest 21% but now by the significant 50% haircut)the Greek politicians started to think 'wait a minute, wasn't a default going to be the end of the world?now that it has been accepted why should we sacrifice more of our economy in order to save you guys from suffering, enough of austerity'
My poker read on the situation is that the PM calling for a referendum was essentially a 'I give up sign', the referendum by it self is irrelevant. For him to call this rather unusual procedure(last time was 1974) means something unusual must be happening backstage and this means the politicians might be changing their course
Thats my bet anyway. I hope the bazookas of headlines that will come out by Merkel and Sarkozi or even the Greek PM trying to contain the panic won't kill the trade
Left early yesterday, so didn't see your post.
To be honest, I was really baffled by the Greek's move. The idea of referrendum must have been in Greek's President's mind for a long time. 1. Either, he has taken a big gamble and is playing Russian roulette against Markozy etall. 2. Or, He is suffering from the phenomena of winner's curse and after having won a 50% debt reduction, is thinking that he took the wrong decision and going back to Drachma would be better for Greece and his own political future. Many a times, human beings after getting something that they have wanted/cherished for a long time, begin to re-think and re-assess that particular thing, and value of that erestwhile highly cherished thing goes down in their eyes. Ok, I am just thinking from a political-psychological angle as to what might have been behind referendum decision.
Now, the possibility of Greek govt collapsing before the referrandum results are out is another known unknown. And like always there are so many unknown unknowns in this situation.
Regarding the risk of getting stopped on this trade, yes the bazooka of headlines are the biggest threat to the trade. Its very easy for euro to spike 2-3 big figures on some headline/rumor just to be negated next day or next hour. However, I will still go with the stop, knowing fully well that getting stopped out on this trade should be considered a distinct possibility. Just because, this is all news driven now, and who knows what kind of news will come and drive Euro where ? So, in my opinion, if you are going to establish a big position, going with a stop is a must and it will be better trade management to get stopped out and re-enter at a possibly worse price upon headline bazooka news getting reversed. Example that comes to my mind is 1Trillion euro bailout fund announcement last year, which moved euro 5 big figures up and then all down, all within the same trading session (London hours - 1.25 to 1.30 move and back).
