• Market:  April 2006 Euro Currency (ECJ6) April Options trade based on the June futures contract price.
• Tick value: 1 point = $12.50 
• Option Expiration: 04/07/06   
• Trade Description: Bull Call Ladder Spread
• Max Risk: $250
• Max Profit:  $1000
• Risk Reward ratio 4:1

Buy one April 2006 Euro Currency 121 call, buy one April Euro Currency 124 call, sell one April Euro Currency 122 call, sell one April Euro Currency 123 call, for a combined cost and risk of 20 points ($250) or less to open a position.

Technical/Fundamental Explanation
Just like last month, we are rolling the Mar. Euro trade into this April Euro trade. I continue to be bullish this market, the recent strength in the Dollar is finally waning and we should a move back below 90 by then end of this week. Notice how on the Monthly chart (first chart) below you can clearly see a very large bull flag that has formed since 2001. Also notice how accurate the CCI indicator has been in this market. On the second chart below which is a daily chart, you can see that the Monthly chart's buy signal is confirmed by the daily charts buy signal. This is confirmation that both the long and short term trend is changing. All in all this is a very low dollar way to be long a near the money call for then next month while getting 4 to 1 on your money.

Profit Goal
Max profit assuming a 20 point fill is 80 points ($1000) giving this trade a 4:1 risk reward ratio. Max profit occurs at expiration with Euro Currency trading between 122 and 123. The trade is profitable at expiration if the Euro Currency is trading any where between 121.20 and 123.80 (break even points) which means we have a band of 260 points in Euro Currency that we can profit in.

Risk Analysis
Max risk assuming a 20 point fill is $250. This occurs at expiration with the Euro Currency trading below 121 or above 124.

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.

Matt Odom is the Managing Partner and Energy Analyst and Derek Frey is Head Trader at Odom & Frey Futures & Options.