Credit: Shutterstock photoThe euro is struggling, and one investor is looking for a collapse.
optionMONSTER's Depth Charge tracking system detected the purchase of 2,000 March 125 puts for $2.15 on the CurrencyShares Euro Trust exchange-traded fund. Equal numbers of contracts were sold the March 118 puts and the March 149 calls for $1 and $0.37 respectively.
The trade resulted in a cost of $1.77 and will earn a maximum profit of 295 percent if FXE closes at or below $118 on expiration. It stands to lose money if the fund rallies to $149, a level it hasn't seen in about two years.
FXE is up 0.55 percent to $134.89 in morning trading. The fund has been under considerable pressure because of the European sovereign-debt crisis.
Today's option trade combines elements of a vertical put spread and a collar strategy . It could be the work of an investor who owns the euro and wishes to hedge against a potential drop, or it could be a speculative bearish bet.
Given that all of the contracts are far out of the money, the entire position will expire worthless if FXE fails to make a significant move. (See our Education section)
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
