Nasdaq 100 Gyrates as Traders Await Federal Reserve Decision
Nasdaq 100 Gyrates as Traders Await Federal Reserve Decision
Also two-year T-note, gold, crude oil and Japanese yen futures
Nasdaq 100 E-mini futures (/NQ): +0.07%
Two-year T-note futures (/ZT): +0.00%
Gold futures (/GC): -0.09%
- Crude oil futures (/CL): -1.50%
- Japanese yen futures (/6J): -0.52%
It’s Federal Reserve decision day, and traders everywhere, likely with coffee in hand, are bracing for market turbulence. No change is expected in the benchmark rate, but this decision comes with an updated set of economic and inflation projections, as well as rate projections that will map out where each member sees rates over the short to medium term.
The bond market movement as of late has reflected the hawkish shift in interest rate cut bets because of stubborn inflation and above-trend economic growth. But the question now is, will the Fed’s statement and summary of economic projections (SEP) surprise against these newly baked-in expectations? And can the artificial mania in stocks like Nvidia (NVDA) help carry the market despite the Fed?
Symbol: Equities | Daily Change |
/ESM4 | -0.07% |
/NQM4 | +0.07% |
/RTYM4 | -0.17% |
/YMM4 | -0.12% |
Nasdaq futures (/NQM4) were slightly higher at the open, slightly ahead of the S&P 500 (/ESM4), which notched a fresh record high yesterday. Intel (INTC) was granted an $8.5 billion contract to fund new chip plants, lifting the stock price nearly 1% in morning trading. Today’s Fed decision will be key for direction, with equity traders focused on the so-called “dot plot,” which displays members’ rate expectations.
Strategy: (41DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 18,000 p Short 18,100 p Short 18,600 c Long 18,700 c | 22% | +1,500 | -500 |
Short Strangle | Short 18,100 p Short 18,600 c | 53% | +12,100 | x |
Short Put Vertical | Long 18,000 p Short 18,100 p | 59% | +750 | -1,250 |
Symbol: Bonds | Daily Change |
/ZTM4 | +0.00% |
/ZFM4 | -0.01% |
/ZNM4 | +0.01% |
/ZBM4 | +0.05% |
/UBM4 | -0.07% |
Not much is going on in the Treasury market this morning, but that is hardly surprising as traders await today’s Fed announcement. The policy-sensitive two-year T-note futures (/ZTM4) is unchanged this morning. Bond traders are keen to hear how the Fed expects to handle its balance sheet going forward after the bank has accomplished some quantitative tightening by allowing Treasuries and mortgage-backed securities (MBS) to roll off. The Treasury will resume auctions tomorrow with 10-year TIPS.
Strategy (37DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 101.875 p Short 102 p Short 102.375 c Long 102.5 c | 21% | +171.88 | -78.13 |
Short Strangle | Short 102 p Short 102.375 c | 43% | +765.63 | x |
Short Put Vertical | Long 101.875 p Short 102 p | 85% | +93.75 | -156.25 |
Symbol: Metals | Daily Change |
/GCJ4 | -0.09% |
/SIK4 | +0.08% |
/HGK4 | -0.44% |
Gold prices (/GCJ4) are also unsurprisingly holding steady as precious metals traders also await news from the Fed decision. With the metal trading near all-time highs, the risks from the announcement might be tilted more to the downside. Higher yields from a hawkish tone could hurt gold prices, but if they hurt equities more, gold may show some of its safe-haven value.
Strategy (36DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 2,140 p Short 2,145 p Short 2,165 c Long 2,170 c | 12% | +430 | -70 |
Short Strangle | Short 2,145 p Short 2,165 c | 52% | +5,580 | x |
Short Put Vertical | Long 2,140 p Short 2,145 p | 72% | +160 | -340 |
Symbol: Energy | Daily Change |
/CLJ4 | -1.50% |
/HOJ4 | -2.37% |
/NGJ4 | -1.87% |
/RBJ4 | -1.44% |
While the fundamental backdrop for crude oil prices (/CLK4) remains supportive, prices dropped 1.5% this morning. Yesterday, the American Petroleum Institute (API) reported a 1.5 million barrel decrease in crude oil stocks and a 1.6 million barrel reduction in gasoline stocks, surprising estimates for both products. However, given the run in prices over the last week, some exhaustion was expected. Today traders will focus on the Fed and a government report on inventory.
Strategy (28DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 79.5 p Short 80 p Short 83 c Long 83.5 c | 22% | +370 | -130 |
Short Strangle | Short 80 p Short 83 c | 54% | +3,440 | x |
Short Put Vertical | Long 79.5 p Short 80 p
| 61% | +190 | -310 |
Symbol: FX | Daily Change |
/6AM4 | -0.11% |
/6BM4 | -0.14% |
/6CM4 | -0.12% |
/6EM4 | -0.14% |
/6JM4 | -0.52% |
Japanese yen futures (/6JM4) traded 0.52% lower to trade at fresh yearly lows as traders continue to punish the currency after the Bank of Japan (BOJ) failed to assuage policy hawks despite ending the negative rate environment. Now, the stronger dollar, is dragging the yen lower, which may introduce the risk of intervention from Japanese policymakers if the slide continues.
Strategy (44DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 0.0066 p Short 0.00665 p Short 0.00675 c Long 0.0068 c | 30% | +425 | -200 |
Short Strangle | Short 0.00665 p Short 0.00675 c | 55% | +1,425 | x |
Short Put Vertical | Long 0.0066 p Short 0.00665 p | 67% | +250 | -375 |
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.
tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.
tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.
tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.
© copyright 2013 - 2024 tastylive, Inc. All Rights Reserved. Applicable portions of the Terms of Use on tastylive.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.