Here we go again with another trip to the French elections
Another big weekend risk event approaches from France as we head to the second round of the French elections. Despite the market seeming relatively calm about it, there is still an element of risk that Le Pen wins and we must never ignore risk no matter how small it may seem.
This is another event that is happening when markets are closed so we have no opportunity to trade over it. We'll be at the mercy of yet another possible gap open when the bank platforms come online Sunday night.
I'm going to side with the consensus that Macron gets through. One of the reasons is that supporters of the other knocked out runners are mostly getting behind him too. I think Le Pen is a few steps too far towards extreme for the majority of populist voters. That's my idol thoughts though.
What I won't ignore is that this is still a two horse race and we should never say never when our money and trading accounts are on the line.
I'm going to cover my EURUSD longs in the same way I did the first round, via out the money puts. I chose 1.0500 & 1.0550 puts last time and they're dirt cheap this time around due to the first round jump in the euro. It's actually looking fairly cheap up to 1.0850 (they're cheaper than what I paid for the 1.05's previously). If you're long euro's and want to hedge, or want a cheap, low risk way profit on a Le Pen win, then have a look at the options.
Back to the important business. We've another risk of a gap open on Sunday/Monday so let's have your guesses for where the price opens. I'll take the open number from the Bloomberg terminal as the level. Remember also that the majority of retail platforms come online sometime after the interbank opens.
As usual, all guesses in the comment below. For the record, I'm picking 1.1020 out of the air.
Our good friend and picture supremo Victor Leonardi knocked this up for Star Wars day yesterday but it's still apt for this post.
Let battle commence....again
