The construction data are currently somewhat of an enigma. The housing market should be benefiting from super low mortgage rates and the high level of consumer confidence but, in fact, housing construction is actually falling. Moreover, commercial and infrastructure construction are also struggling to grow. The construction PMI also appears to have peaked, although at a level that should be consistent with positive growth.There are pretty clear grounds why infrastructure construction should be weak as there is no sufficient capital from British regime deployed to fund it but we are amazed to spot similar softness in industrial and commercial construction which should be benefiting from the strength of the economic recovery.We expect in the April data a little bit more strength in housing construction in reaction to the favorable consumer conditions. Accordingly, we expect an increase in the construction PMI from 57.8 to 58.5Derivatives watch:Option Strategy: Short butterflyOn daily chart of EUR/GBP, we do not see any strong support for cushioning in near term until a downward point of 0.7307. It seems like with an early downward convergence on RSI (14) & price curve and bearish crossover on stochastic occurred.Having said that, on the verge of general elections high volatility is stimulating the GBP upswings.Those who would see this event as largely non directional should short a butterfly.Expect the underlying currency to move a large move higher or lower but not sure of direction.Established using all calls or puts and is done for a net credit.Although it carries high risk premium, this is best suitable for risk averse investors wherein trader sells one call with a low exercise price (OTM), sells another call with higher exercise price (ITM) and buys 2 Calls with an intermediate exercise price (ATM).The maximum loss could be the difference in exercise price of ATM calls and exercise price of ITM &OTM calls minus total credit received.On the contrary the maximum gains could be to the extent of total credit received.As Option values are based on the movements in the underlying stock, it can be used in conjunction with an existing long position to lock in a Profit, Hedge or limit a potential loss or create an additional Profit or leverage.
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