2. Short Futures

Scenario:

This trader is a technician. He sees a major turnaround in the price of Euro FX Futures. He points out that chart patterns suggest a big downward move, the short-term moving average crossed under the longterm moving average, even the fundamentals look bearish. He has looked at the options market, but feels that a short futures position would be the best.

Specifics:
Underlying Futures Contract:	September Euro FX
Futures Price Level:	1.0100
Days to Futures Expiration:	65
Days to Options Expiration:	55
Option Implied Volatility:	14.9%
Position:	Short 1 Futures

At Expiration:
Breakeven:	1.0100 (original futures price)
Loss Risk:	Unlimited; losses increase as futures rise.
Potential Gain:	Unlimited; profits increase as futures fall.

Things to Watch:

Implied volatility has no effect on this position. If the trader has an opinion on volatility, he may consider another strategy. Other strategies may increase the reward and/or reduce the risk. Check the following page for follow-up strategies.

Follow-up Trading Strategies