I did not make any changes to my positions in FXA, FXC, or FXF. They are currency hedges against the potential devaluation of the U.S. dollar. I have no open options positions on those ETFs.
The only change I did make was to buy a long put against FXE, the CurrencyShares Euro Trust. I did this because I believe the euro in its present form is doomed. Read my articles yesterday on the EU/ECB/IMF extortion of bank deposit account holders in Cyprus. No bank customer in any of the heavily indebted euro countries will feel safe holding cash in a European bank now that their confidence has been shattered. My bet on a very long-dated FXE put is a bet that the euro will be much less valuable or even nonexistent in a few years.
Watch Cyprus this week. Their government has two options. Option one: They can accept the European bailout and harm their depositors, accelerating a run on European banks. Option two: They can reject the bailout and force Cyprus' banks into bankruptcy, which will require Cyprus to immediately leave the eurozone. Once one country leaves, other PIIGS will be tempted to follow.
Game theory predicts that the first defector from a sub-optimal regime is the winner. All other subsequent defectors pay progressively larger penalties the longer they wait to defect. I am sitting in cash that I will deploy at some appropriate point once the chaos is in full swing.