Trade the Brexit – A Review of the New easyMarkets Program

Britain’s upcoming referendum on European Union (EU) membership has left many traders jittery. How will the market react if Britain leaves the EU? How will the vote impact volatility, liquidity and the performance of British and regional assets? While there’s a lot of uncertainty surrounding the so-called ‘Brexit,’ the vote has the potential to be one of the most profitable. After all, how often does a powerful European country have the opportunity to vote on whether it wants to stay in the EU?

easyMarkets has carefully weighed the opportunities and risks of trading the British referendum in its latest ‘Trade the Brexit’ program, which is designed to help traders take advantage of a UK exit from the EU.

The program’s message is very clear: “If you think the pound will drop against the USD under 1.15 then let us know how much you’re willing to risk and we’ll do the rest.”

The program is very straightforward for traders looking to risk a fixed amount for the opportunity to make a substantial gain on the GBP/USD exchange rate through the options market. Options are contracts that give buyers the right, but not the obligation, to buy or sell a security at a specific price on or before a pre-defined date. Much like stocks, bonds and other assets, options are binding contracts with strictly defined terms.[1]

The easyMarkets program gives traders the choice of three options programs:

$15 put option for a payout of $500 if the GBP/USD reaches 1.10 and $1,500 if the GBP/USD reaches 1.00
$150 put option for a payout of $5,000 if the GBP/USD reaches 1.10 and $15,000 if the GBP/USD reaches 1.10
$1,500 put option for a payout of $50,000 if the GBP/USD reaches 1.10 and $15,000 if the GBP/USD reaches 1.10
The payout is based on the amount of capital the trader is willing to put up, which is not unlike normal options trading. The $15 and $150 options are especially attractive for traders who are still on the fence about trading Brexit. These low-risk, high-reward positions may net large returns in the event that Brits vote ‘Leave’ on June 23 and the pound falls against the US dollar.

The conditions of the put contracts are also clearly outlined, giving traders an upfront assessment of their risks and opportunities. These conditions include:

Put options on the GBP/USD expire on June 27, 2016, four days after the Brexit vote. The strike price is 1.15.
Traders are provided with a custom link via email in order to view open positions.
Traders can choose to close the deal at any time before the expiry day of June 27, 2016.
The options contracts ensure you can never lose more than you risk. The profit potential is unlimited.
The Advantages of Options

Options have a number of unique advantages. They are considered more cost efficient and potentially less risky if used correctly. As the easyMarkets program clearly demonstrates, options also carry higher potential returns without the same order of magnitude in terms of losses. Best of all, options provide more strategic alternatives in a dynamic market that is influenced by a wide range of factors. Traders searching for flexibility typically find options to be one of the most worthwhile investment tools. To learn more about options trading, visit the easyMarkets Options trading page.

The Case for Trading Brexit

The 23 June referendum has been described as one of the most pivotal events in Britain’s recent history. Will Britain finally solve its long-standing issues with broader EU integration or will it remain in the bloc over fears of political and economic backlash? The latest opinion polls suggest that Britons are struggling to answer these questions.

The possibility of Brexit is more than just a pipe dream, if the latest public opinion polls are any indication. For the first time ever, the Leave campaign has taken the lead, a sign the tide may be turning. According to the latest Observer/Opinium poll on the EU referendum, the Leave campaign has opened up a three-point lead over Remain. The anti-Brexit front has lost four percentage points in the last two weeks, as Members of Parliament Boris Johnson and Michael Gove relentlessly campaigned on the issue of immigration. Mr. Johnson is expected to launch a campaign on the security challenges of EU membership, including the possibility of Turkey’s accession to the 28-member group.[2]

The latest YouGov opinion poll showed a 41-41 split between Leave and Remain. The last two ICM polls also point to a three-point lead for the Brexiters.[3]

Many powerful leaders from around the world, including US President Barack Obama and International Monetary Fund (IMF) leader Christine Lagarde, have warned against the negative consequences of Brexit. The great majority of economists and financial analysts also say that Brexit would have a negative impact on the UK economy, especially over the short-term. For these and other reasons, British Prime Minister David Cameron is campaigning hard to keep Britain part of the EU. This politically charged debate is expected to intensify over the next two weeks, which could impact everything from the British pound to global stocks.

Clearly, easyMarkets has recognized that Brexit is a real possibility that traders need to carefully weigh in the weeks leading up to the vote. The ‘Trade the Brexit’ program is a simple way to gain exposure to this market. The GBP/USD exchange rate is expected to be one of the most vulnerable to a Brexit vote, especially in the short-term.

To learn more about how you can use options to take advantage of the upcoming EU referendum, visit the easyMarkets ‘Trade the Brexit’ program page.

[1] Investopedia. Options Basics: What Are Options?

[2] Daniel Boffrey (June 5, 2016). “Poll gives Brexit campaign lead of three percentage points.” The Guardian.

[3] Financial Times. Brexit poll tracker.

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