Drachma Options Trading

Drachma Options Trading
By www.Options-Trading-Education.com

http://www.options-trading-education.com/24186/drachma-options-trading/
If things go from bad to worse with
Greece they could revert to the
Drachma and then we would see
drachma options trading in the Forex
markets!

How did this come to be? When the
2008 Great Recession started the
Europeans followed the same path
that the USA did, in the early 1930s.

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Before We Continue…

They adopted austerity measures to
deal with excessive national debts.

Meanwhile the USA stimulated its
economy under the leadership of Fed
chairman Bernanke, the greatest living
scholar of the Great Depression.

The US approach worked and the
European approach still threatens to
sink Europe into recession again.

Along the way nations like Greece and
Spain have had to deal with
unemployment in the 25% or worse
range.

In fact, in Greece unemployment
among young workers is 70%.

The Greeks agreed to severe austerity
measures in return for a series of
bailout loans coming to about €170
billion.

Now the Greek government has
changed and the new leadership
demands loan restructuring and
cessation of austerity measures so
that they can get their economy going
again.

Is There a Solution?

The new Greek prime minister has
come to Brussels in hopes of
negotiating some breathing room for
his nation.

Newsweek covers the Greek debt
crisis story.

Talks between Greece and euro zone
finance ministers over the country’s
debt crisis broke down on Monday
when Athens rejected a proposal to
request a six-month extension of its
international bailout package as
“unacceptable”.

The unexpectedly rapid collapse
raised doubts about Greece’s future in
the single currency area after a new
leftist-led government vowed to scrap
the 240 billion euro ($272.4 billion)
bailout, reverse austerity policies and
end cooperation with EU/IMF
inspectors.

How long Greece can keep itself
afloat without foreign support is
uncertain.

The Greeks believe that they cannot
go on as things are.

If the EU does not agree to new
terms, Greece may choose what they
consider to be the lesser of two evils
and leave the EU.

They would go back to their traditional
currency, the Drachma, and Forex
traders could trade the drachma or
choose drachma options trading. How
would that work out?

Results of a Grexit

The possibility of a Greek exit from the
EU has been talked about for so long
that the news sources have adopted a
shorthand version, the Grexit.

If Greece is forced out of the Euro
what happens? The Business
Insider offers its opinion.

Rampant inflation, political unrest,
debt defaults and a possible
“contagion” within Europe’s financial
sector

That’s what Greece’s new government
might trigger if it does not get its way
in its negotiations with the rest of
Europe’s finance ministers right now.

If Greece leaves the Eurozone it
would likely suffer a banking collapse
and many economists fear that bank
runs and banking collapses could
become contagious across the
southern tier of the European Union.

Greece would need to decide if
business contracts and especially
mortgages now denominated in Euros
could be paid off in steadily
depreciating Drachmas.

There are assessments that a new
Drachma would lose two thirds of its
value in a couple of months.

Drachma Options Trading

If Greece goes back to the Drachma
they need close the banks for a few
days and print lots of new currency.

And according to a BBC analysis
Greece would enter the economic
equivalent of a nuclear winter for its
future. Here is a worst case scenario.

The country will enter the economic
equivalent of a nuclear winter.

There would be a chaotic race to
create the new drachma – distributing
the new currency and even finding
printing presses could prove next to
impossible.

Repayment of any euro foreign
currency debt using the devalued
drachma would become a massive
burden

Which the government might just give
up on altogether, making it impossible
to borrow on the international markets.

Imports would dry up. Some of them,
such as medical supplies, oil, raw
materials and a range of food and
everyday items would create huge
hardships.

Inflation would spike dramatically and
raw material shortages would cripple
industry, creating unemployment.

Savers and investors would withdraw
euros, causing massive capital flight.

If this bleak scenario is the case, the
only viable option in drachma options
trading will be puts on the drachma
versus virtually every other currency in
the world

As the currency follows an Argentine
or Weimar Republic example of
devaluing a million fold or more.

Drachma Options Trading

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Drachma Options Trading