We had a subscriber ask about any suggestions where to look for possible currency ETFs action. Interest rates at record rates not only in the U.S. but globally as well.  Add into the mix huge amount of monetary easing  like QE3 from U.S. Federal Reserve and central banks around the globe like Japan, Australia and England just to mention a few has seem  have broken the system.What do I mean by a broken system?   Look no further than the U.S. market and its central bank.  U.S. For all intensive purposes the U.S.  interest rate is basically zero. By having record low interest rates coupled with quantitative easing, QE1, QE2 and now Q3 the effect of each stimulus package effect on the market is less.

Analysts are now pointing out with the continuing uncertainty with in the Euro Zone, China and even the U.S. fiscal cliff has flattened returns of the currency carry trade but yet recent volatility in the currencies has peaked our readers and us as well.

Right now options with in these currency ETFs are relatively cheap out in the January expirations and my personal favorite to trade is the Currency Shares Japanese Yen Trust (FXY, quote).  I idea is as the continues to grow we should see some movement with the ETF but which direction are unknown and it likely we will see nice moves in both direction hence the volatility.

We want to look at putting on a straddle that we will actively monitor and exit once we get a significant move up of 55%-80% in either directions and exit the particular side and wait for the direction and shift.  This not a set and leave until expiration type of position.

Consider Buying to open Jan13 Call 125 for $1.45 and but to open Jan13 Put 125 for $1.80

Remember to check with your broker for any question and your risk exposure.