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How to Trade Greek Drama

Greek Labor Unions Strike
AP
Greek Labor Unions Strike

The clock is ticking on Greece's efforts to pass austerity measures. Here's how to trade the drama.

Sure, we made a little headway on the Greek mess when German Chancellor Angela Merkel agreed to a voluntary rollover of Greek bonds, and the IMF offered to release money to Greece even without an austerity plan. But the real action will come on Tuesday, when Parliament votes on the new pro-reform cabinet.

"The vote on Tuesday is going to be very important," says Andrew Busch, global currency and public policy strategist for BMO Capital.

Amelia Bourdeau, director of foreign exchange at Westpac Institutional Bank, agrees, and she recommends that in this fluid environment, investors maintain plenty of flexibility.

"Despite the fact that Greece may sail through next week, there's a lot of headline risk," Bourdeau told CNBC's Melissa Lee.

To trade this tumult, Bourdeau recommends selling the euro against the Australian dollar.

"If Greece is a debacle next week, the euro will fall, especially against the Australian dollar," she says. If everything goes relatively smoothly, on the other hand, "You'll see the euro rally, but you're also protected from that euro short because the Australian dollar is going to rally as well."

Bourdeau suggests selling the euro against the Aussie at 1.3450 with a stop at 1.3665 and a target of 1.3000.

You can watch the whole discussion right here.

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