http://www.Options-Trading-Education.com - Euro Zone Recovery - A Euro Zone recovery may be in the works. Stocks rallied in Europe on news that Germany, as well as China, manufacturing indices came in higher than forecasted. A sign of renewed confidence on the continent was the lower interest rates paid at auction for Italian bonds although French bonds weakened. Meanwhile the Euro fell against thirteen of the sixteen currencies that it trades against. After the European Central Bank dispensed loans to a large number of ailing banks the specter of a run on French banks has receded. For options traders a Euro Zone recovery could mean profits in European stocks or in trading options on the Euro. Much of the difficulty in trading the Euro or European stocks has come from uncertainty. Many doubted the willingness of the EU to come up with the money needed to bail out ailing economies. Many also doubted the ability of the EU to come up with a solution that did not simply encourage greater and greater debt. The recent EU economic summit may have come up that solution and the key to longer term Euro Zone recovery. Trading options on Euro Zone stocks could be profitable. The recent EU summit arrived at two useful solutions. One is that going forward Euro Zone economies will be more closely linked, with the end result that it will harder for nations to overspend. The other is that the European Central Bank now has more flexibility and independence in dealing with both insolvent banks and insolvent nations. The bank recently made loans of roughly half a trillion Euros to stabilize the continental banking system. Investors and traders were first relieved that the bank was putting things in order. Then everyone seemed to change their minds and worry that the various banks needed so much money in the first place. Nevertheless, the fact that the EU seems to have a clearer game plan and that they are taking firm action seems to have pleased the markets. The French austerity plan is a good case in point. Now the news that manufacturing is stronger in Germany, the continent’s leading manufacturer, leads traders and investors to believe that a Euro Zone recovery is in the works. It also does not hurt that manufacturing in China came in ahead of forecasts and that the US economy seems to be finally picking up steam. A Euro Zone recovery will not necessarily mean that all stocks will rise. For example, investors and traders are more interested in German companies as the German economy is stronger and more stable. As evidenced by the rise in stocks and fall in the Euro recently it could well be that a developing Euro Zone recovery might not be linked to a stronger Euro, at least in the short term. This is, of course, one of the reasons why many buy options. Whether it is dealing with volatile foreign currency rates or a chaotic stock market, traders can hedge their investment risk when buying calls or puts on stocks or currencies.

2. A EURO ZONE RECOVERY MAY BE IN THE
WORKS.
W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M

3. STOCKS RALLIED IN EUROPE ON NEWS
THAT GERMANY, AS WELL AS CHINA,
MANUFACTURING INDICES CAME IN
HIGHER THAN FORECASTED.
W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M

4. A SIGN OF RENEWED CONFIDENCE ON THE
CONTINENT WAS THE LOWER INTEREST
RATES PAID AT AUCTION FOR ITALIAN
BONDS ALTHOUGH FRENCH BONDS
WEAKENED.
W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M

5. MEANWHILE THE EURO FELL AGAINST
THIRTEEN OF THE SIXTEEN CURRENCIES
THAT IT TRADES AGAINST. AFTER THE
EUROPEAN CENTRAL BANK DISPENSED
LOANS TO A LARGE NUMBER OF AILING
BANKS THE SPECTER OF A RUN ON
FRENCH BANKS HAS RECEDED.
W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M

6. FOR OPTIONS TRADERS A EURO ZONE
RECOVERY COULD MEAN PROFITS IN
EUROPEAN STOCKS OR IN TRADING
OPTIONS ON THE EURO. MUCH OF THE
DIFFICULTY IN TRADING THE EURO OR
EUROPEAN STOCKS HAS COME FROM
UNCERTAINTY.
W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M

7. MANY DOUBTED THE WILLINGNESS OF THE
EU TO COME UP WITH THE MONEY NEEDED
TO BAIL OUT AILING ECONOMIES.
W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M

8. MANY ALSO DOUBTED THE ABILITY OF THE
EU TO COME UP WITH A SOLUTION THAT
DID NOT SIMPLY ENCOURAGE GREATER
AND GREATER DEBT.
W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M

9. THE RECENT EU ECONOMIC SUMMIT MAY
HAVE COME UP THAT SOLUTION AND THE
KEY TO LONGER TERM EURO ZONE
RECOVERY.
W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M

10. THE RECENT EU SUMMIT ARRIVED AT TWO
USEFUL SOLUTIONS.
W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M

11. ONE IS THAT GOING FORWARD EURO ZONE
ECONOMIES WILL BE MORE CLOSELY
LINKED, WITH THE END RESULT THAT IT
WILL HARDER FOR NATIONS TO
OVERSPEND.
W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M

12. THE OTHER IS THAT THE EUROPEAN
CENTRAL BANK NOW HAS MORE
FLEXIBILITY AND INDEPENDENCE IN
DEALING WITH BOTH INSOLVENT BANKS
AND INSOLVENT NATIONS.
W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M

13. THE BANK RECENTLY MADE LOANS OF
ROUGHLY HALF A TRILLION EUROS TO
STABILIZE THE CONTINENTAL BANKING
SYSTEM.
W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M

14. THE BANK RECENTLY MADE LOANS OF
ROUGHLY HALF A TRILLION EUROS TO
STABILIZE THE CONTINENTAL BANKING
SYSTEM.
W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M

15. THEN EVERYONE SEEMED TO CHANGE
THEIR MINDS AND WORRY THAT THE
VARIOUS BANKS NEEDED SO MUCH
MONEY IN THE FIRST PLACE.
W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M

16. NEVERTHELESS, THE FACT THAT THE EU
SEEMS TO HAVE A CLEARER GAME PLAN
AND THAT THEY ARE TAKING FIRM ACTION
SEEMS TO HAVE PLEASED THE MARKETS.
W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M

17. THE FRENCH AUSTERITY PLAN IS A GOOD
CASE IN POINT. NOW THE NEWS THAT
MANUFACTURING IS STRONGER IN
GERMANY, THE CONTINENT’S LEADING
MANUFACTURER, LEADS TRADERS AND
INVESTORS TO BELIEVE THAT A EURO ZONE
RECOVERY IS IN THE WORKS.
W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M

18. IT ALSO DOES NOT HURT THAT
MANUFACTURING IN CHINA CAME IN
AHEAD OF FORECASTS AND THAT THE US
ECONOMY SEEMS TO BE FINALLY PICKING
UP STEAM.
W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M

19. A EURO ZONE RECOVERY WILL NOT
NECESSARILY MEAN THAT ALL STOCKS
WILL RISE.
W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M

20. FOR EXAMPLE, INVESTORS AND TRADERS
ARE MORE INTERESTED IN GERMAN
COMPANIES AS THE GERMAN ECONOMY IS
STRONGER AND MORE STABLE.
W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M

21. AS EVIDENCED BY THE RISE IN STOCKS
AND FALL IN THE EURO RECENTLY IT
COULD WELL BE THAT A DEVELOPING
EURO ZONE RECOVERY MIGHT NOT BE
LINKED TO A STRONGER EURO, AT LEAST
IN THE SHORT TERM.
W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M

22. THIS IS, OF COURSE, ONE OF THE REASONS
WHY MANY BUY OPTIONS. WHETHER IT IS
DEALING WITH VOLATILE FOREIGN
CURRENCY RATES OR A CHAOTIC STOCK
MARKET, TRADERS CAN HEDGE THEIR
INVESTMENT RISK WHEN BUYING CALLS
OR PUTS ON STOCKS OR CURRENCIES.
W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M

23. LIKEWISE THE ABILITY TO LEVERAGE
INVESTMENT CAPITAL GIVES OPTIONS
TRADERS THE OPPORTUNITY TO MULTIPLY
THEIR GAINS SHOULD A STRONG EURO
ZONE RECOVERY EMERGE.
W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M