Italian debt crisis and Option Trading

dudij · Nov 15, 2011

The current debt crisis in Italy must present some great trading opportunities.

I'd probably look to opening a long straddle trade, but I'm not so strong re: technical analysis.

Was wondering

1) What vehicles would be the best to trade around the Italian debt crisis.

2) Opinions regarding technical analysis and the potential for price movements in the next 1-3 months.

Martinghoul · Nov 16, 2011

The best vehicle to trade the Italian debt crisis is, surprise surprise, Italian debt. But you can't do options on it.

Not really sure what your second question is about.

trading spaces · Nov 16, 2011

There is a btp future on eurex not sure if it is liquid though.

Ye Olde Refco · Nov 16, 2011

Quote from trading spaces:

There is a btp future on eurex not sure if it is liquid though.

Liquid enough for the sort of size traded by most individuals taking a short term view.

Get involved, it will put hairs on your chest and nuts.....

ASusilovic · Nov 16, 2011

Quote from trading spaces:

There is a btp future on eurex not sure if it is liquid though.

http://www.eurexchange.com/download/documents/publications/Factsheet_BTP.pdf

Volume : 14-23.000 per day. Seems 89.25 to be some sort of support....Maybe I throw in a 1000 lot order and squeeze the market "a bit". Should give quant and momentum tarders a nice bost in correlated EUR, bunds and other "related" markets, too.

Martinghoul · Nov 16, 2011

Quote from Ye Olde Refco:

Get involved, it will put hairs on your chest and nuts.....

Hell yeah... That beast is what truly separates the boys from the men.

dudij · Nov 16, 2011

Martinghoul:

What do you think of a general play on the EURO as a proxy for trading options on Italian debt.

While researching this, I've found the FXE is highly liquid and has tight bid-ask spreads, so good for option trading.

I'd think of opening a long straddle over the next 1-3 months.

What do you think?

spindr0 · Nov 17, 2011

There are a bunch of ETFs, many of which have options. EWI (Italy) has been pummeled but you might look at the other PIIGS as well as other Euro member ETFs.

bc1 · Nov 17, 2011

Quote from dudij:

Was wondering

What vehicles would be the best to trade around the Italian debt crisis.

A Ferrari would be the best vehicle to trade for and help their debt crisis and create a debt crisis for you at the same time.

FrankSlaughtery · Nov 18, 2011

Quote from spindr0:

There are a bunch of ETFs, many of which have options. EWI (Italy) has been pummeled but you might look at the other PIIGS as well as other Euro member ETFs.

if you take a look at the volume for the past month, a vast majority of it is on the put side so at least you have the liquidity there. sometimes traders have the greatest trade idea but the instrument they're using is so illiquid that the b-a spread eliminates almost all the profit.