Down with the Pound!

09/16/2007 12:00 am EST

Focus: MARKETS

Jack Crooks

President, Black Swan Capital LLC

In an exclusive interview at the recent Forex Expo, Jack Crooks, founding editor and currency director, Crooks Currency Group, told us that the subprime problems have spread across the sea, bringing old-fashioned bank runs, such as that seen recently at embattled British bank, Northern Rock.

The result was continued pressure on the British pound against the US dollar, which Jack believes will continue for some time. For traders, such a crisis can mean a great opportunity for profits. With that in mind, Jack shared two strategies to take advantage of this weakness:

  1. Use currency options – buy a put against the pound, time frame three-six months. Then, just let the problems play them out.
  2. Short the pound against the Swiss franc (go long the franc). Jack believes the franc will hold up well in this risky environment and likes this trade for investors who don’t want to play directly against the US dollar.
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