S&P 500 Starts Slowly as Gold Surges Amid U.S.-Russia Negotiations
S&P 500 Starts Slowly as Gold Surges Amid U.S.-Russia Negotiations
Also, 10-year T-note, gold, crude oil and euro futures
- S&P 500 E-mini futures (/ES): 0%
- 10-year T-note futures (/ZN): -0.26%
- Gold futures (/GC): +1.46%
- Crude oil futures (/CL): +1.02%
- Euro futures (/6E): -0.4%
A mixed market is emerging today amid a flurry of headlines around the Russia-Ukraine war. Talks between Russia and the U.S. in Riyadh, Saudi Arabia, have sidelined Ukraine and the European Union thus far, and progress from the talks has apparently enflamed Ukrainian President Volodymyr Zelensky to the point that he canceled his trip to Saudi Arabia. Dampening sentiment, investors are proving cautious toward equities and embracing both gold and the U.S. dollar on the other side of the long weekend.
Symbol: Equities | Daily Change |
/ESH5 | 0% |
/NQH5 | -0.1% |
/RTYH5 | +0.08% |
/YMH5 | -0.31% |
U.S. equity markets have cooled off from their overnight highs. Headlines around Ukraine’s reaction to the Russia-U.S. talks may be curbing enthusiasm that an end to the war is around the corner. Earnings releases this week are fairly light, although reports from Walmart (WMT) and Alibaba (BABA) on Thursday should prove market moving unto themselves. Volatility remains constrained across the indexes, with IVRs persisting below 20.
Strategy: (45DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 5700 p Short 5800 p Short 6450 c Long 6550 c | 64% | +812.50 | -4187.50 |
Short Strangle | Short 5800 p Short 6450 c | 68% | +2187.50 | x |
Short Put Vertical | Long 5700 p Short 5800 p | 88% | +350 | -4650 |
Symbol: Bonds | Daily Change |
/ZTH5 | -0.04% |
/ZFH5 | -0.12% |
/ZNH5 | -0.26% |
/ZBH5 | -0.43% |
/UBH5 | -0.6% |
Treasuries continue to twist and turn, slightly weaker across the curve today, though very much tethered to levels seen throughout February. A push higher in energy prices may be contributing to the weakness at the long-end. A litany of Federal Reserve officials speaking over the coming days, and a 20-year bond auction tomorrow should keep attention at the long-end of the curve at least through the middle of the week.
Strategy (66DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 105.5 p Short 106.5 p Short 111.5 c Long 112.5 c | 64% | +234.38 | -765.63 |
Short Strangle | Short 106.5 p Short 111.5 c | 68% | +515.63 | x |
Short Put Vertical | Long 105.5 p Short 106.5 p | 89% | +109.38 | -890.63 |
Symbol: Metals | Daily Change |
/GCJ5 | +1.46% |
/SIH5 | +0.78% |
/HGH5 | -2.36% |
A brutal day for metals on Friday has been reversed to a large degree on Monday. Gold prices (/GCJ5) have erased nearly all losses, trading to a level that, if it were to close here, would be an all-time closing high. Silver prices (/SIH5) have likewise rebounded, although copper futures (/HGH5) are weaker amid a late reversal in Chinese-linked assets.
Strategy (65DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 2775 p Short 2790 p Short 3160 c Long 3175 c | 61% | +460 | -1040 |
Short Strangle | Short 2790 p Short 3160 c | 70% | +4340 | x |
Short Put Vertical | Long 2775 p Short 2790 p | 79% | +240 | -1260 |
Symbol: Energy | Daily Change |
/CLJ5 | +1.02% |
/HOH5 | -0.02% |
/NGH5 | -0.59% |
/RBH5 | +0.21% |
Crude oil prices (/CLJ5) are finding some support as initial negotiations between Russia and the U.S. wrap up in Riyadh, Saudi Arabia. An end to the war could mean a lifting of sanctions against Russia, which in turn would end the shadow market that has seen Russian oil sold well-below prevailing market prices (a veritable albatross on oil markets in recent years). Nevertheless, oil volatility remains exceptionally low, with IVRs staying below 10 in recent sessions.
Strategy (57DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 62.5 p Short 64 p Short 79.5 c Long 81 c | 68% | +310 | -1190 |
Short Strangle | Short 64 p Short 79.5 c | 73% | +1270 | x |
Short Put Vertical | Long 62.5 p Short 64 p | 84% | +170 | -1330 |
Symbol: FX | Daily Change |
/6AH5 | -0.06% |
/6BH5 | +0.13% |
/6CH5 | -0.18% |
/6EH5 | -0.4% |
/6JH5 | +0.33% |
The prospect of peace in Eastern Europe doesn’t seem to be inspiring traders to support the euro (/6EH5) out of the gate this week. A ceasefire or permanent end to the Russian invasion of Ukraine, coupled with a pullback in American involvement, has led to talks of a rapid buildup of a European defense force, which could ultimately result in massive fiscal expenditures by European nations. While good news for European equities, the euro is finding some difficulty in celebrating the news.
Strategy (45DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 1.01 p Short 1.025 p Short 1.075 c Long 1.09 c | 65% | +425 | -1450 |
Short Strangle | Short 1.025 p Short 1.075 c | 69% | +700 | x |
Short Put Vertical | Long 1.01 p Short 1.025 p | 88% | +200 | -1675 |
Christopher Vecchio, CFA, tastylive’s head of futures and forex, has been trading for nearly 20 years. He has consulted with multinational firms on FX hedging and lectured at Duke Law School on FX derivatives. Vecchio searches for high-convexity opportunities at the crossroads of macroeconomics and global politics. He hosts Futures Power Hour Monday-Friday and Let Me Explain on Tuesdays, and co-hosts Overtime, Monday-Thursday. @cvecchiofx
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. #@fxwestwater
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