• Market:  April 2007 Euro Currency (ECJ7)*April options trade based on the June Futures price. (ECM7)
• Tick value: 1 point = $12.50
• Option Expiration: 04/05/07   
• Trade Description: Bull call ladder spread
• Risk Reward ratio: 3:1
• Max Risk: $300
• Max Profit: $950

Buy an April '07 Euro Currency 2007 133 call and at the same time buy an April '07 Euro Currency 136 call while selling an April '07 Euro Currency 134 and 135 call for a maximum cost and risk of 24 points ($300) or less to open a position.

Technical / Fundamental Explanation
The Euro has been stuck in a trading range since December of 2006. The European Central Bank (ECB) just raised rates and all but stated that they intend to raise again at future meetings. This should be the catalyst that the market has been waiting for to break it out of this trading range, a move above 132.75 would be a channel break out and a close above 133.72 would further confirm that. This trade is a way to put a minimum of capital at risk while positioning for the breakout.

Profit Goal
Or profit goal would be a move anywhere between 134-135. If we meet that objective the profit will be 76 points ($950) on our $300 risk giving you over 3:1 on your money. Our break even points assuming a 24 point fill are 133.24 and 135.76 so have a range of 252 points in which we can profit.

Risk Analysis
Max risk, before commissions and fees, and assuming a 24 point fill, is $300. This occurs at expiration with The Euro Currency trading below 133 or above 136.

Derek Frey is Head Trader at Odom & Frey Futures & Options.

Risk Disclaimer
Past performance is not indicative of future results. Trading futures and options is not suitable for everyone. There is a substantial risk of loss in trading futures and options.