Nasdaq 100 Steps Back as Equity Rally Cools
Nasdaq 100 Steps Back as Equity Rally Cools
Also 30-year T-bond, copper, gasoline and Japanese yen futures
- Nasdaq 100 e-mini futures (/NQ): -0.20%
- 30-year T-bond futures (/ZB): +0.63%
- Copper futures (/HG): -0.30%
- Gasoline futures (/RB): -1.55%
- Japanese yen futures (/6J): +0.39%
Absent significant economic data releases or earnings reports, global financial markets are treading water once again on Thursday.
Equity index futures are modestly lower following Wednesday’s mixed session, although U.S. Treasury bonds are bouncing back. Perhaps the biggest catalyst for the rest of the week will be news from the Asia-Pacific Economic Cooperation (APEC) summit, where U.S. President Joe Biden and Chinese President Xi Jingping have been holding bilateral meetings to ensure the world’s foremost economic and military superpowers avoid confrontation across multiple arenas.
Symbol: Equities | Daily Change |
/ESZ3 | -0.07% |
/NQZ3 | -0.20% |
/RTYZ3 | -0.28% |
/YMZ3 | -0.16% |
Russell 2000 down the most
U.S. equity index futures are trading slightly lower on Thursday following a sideways, choppy session yesterday. After outperforming most of the day on Wednesday, the Russell 2000 (/RTYZ3) is leading to the downside. Earnings releases predicated around the health of the U.S. consumer have offered mixed views as well, with Macy’s (M) charging higher while Walmart (WMT) has slumped meaningfully.
Strategy: (43DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 15600 p Short 15700 p Short 16500 c Long 16600 c | 35% | +1150 | -850 |
Long Strangle | Long 15600 p Long 16600 c | 42% | x | -6480 |
Short Put Vertical | Long 15600 p Short 15700 p | 68% | +550 | -1450 |
Symbol: Bonds | Daily Change |
/ZTZ3 | +0.14% |
/ZFZ3 | +0.33% |
/ZNZ3 | +0.48% |
/ZBZ3 | +0.63% |
/UBZ3 | +0.79% |
Weaker jobs market
Weaker U.S. jobless claims are aligning neatly with the Federal Reserve’s desire to see a softer labor market, which further reduces the need of another rate hike this cycle. That said, Fed rate hike odds were zeroed out ahead of today. The focus is now on whether traders think a rate cut is necessary by March. The long end of the curve continues to be the biggest mover, with 30s (/ZBZ3) and ultras (/UBZ3) leading the way higher.
Strategy (36DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 110 p Short 111 p Short 119 c Long 120 c | 56% | +390.63 | -609.39 |
Long Strangle | Long 110 p Long 120 c | 28% | x | -1062.50 |
Short Put Vertical | Long 110 p Short 111 p | 81% | +203.13 | -796.88 |
Symbol: Metals | Daily Change |
/GCZ3 | +0.58% |
/SIZ3 | +1.98% |
/HGZ3 | +0.30% |
Copper futures rise
Copper futures (/HGZ3) rose for the fourth day this morning and are now on track to record the best weekly percentage gain since March after rate traders started to price in rate cuts as early as March. Protests at one of the world’s largest copper mines is also helping to support prices, with the Cobre Panama mine reducing output, according to First Quantum Minerals. The mine accounts for around 1% of global copper production.
Strategy (40DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 3.71 p Short 3.72 p Short 3.8 c Long 3.81 c | 16% | +212.50 | -37.50 |
Long Strangle | Long 3.71 p Long 3.81 c | 49% | x | -2950 |
Short Put Vertical | Long 3.71 p Short 3.72 p | 61% | +112.50 | -137.50 |
Symbol: Energy | Daily Change |
/CLZ3 | -1.57% |
/HOZ3 | -0.96% |
/NGZ3 | -0.88% |
/RBZ3 | -1.55% |
Gasoline prices (/RBZ3) fell alongside oil this morning as traders continued to digest yesterday’s inventory numbers that showed a 3.6-million-barrel build in oil stocks for the week ending Nov. 10, and +13.9 million for the week ending Nov. 3.
While it showed that gasoline inventory decreased for the prior two periods. A recent change in the way the Energy Information Administration (EIA) accounts for products has left traders unsure if that is due to increased demand. Usually, at this time of year, gas stations stock up their tanks to prepare for holiday driving demand, which likely accounts for part of the draw.
Strategy (xDTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | x | x | x | x |
Long Strangle | x | x | x | x |
Short Put Vertical | x | x | x | x |
Symbol: FX | Daily Change |
/6AZ3 | -0.20% |
/6BZ3 | +0.12% |
/6CZ3 | -0.27% |
/6EZ3 | +0.28% |
/6JZ3 | +0.39% |
The Japanese Yen (/6JZ3) rose again as trader remained cautious about a possible intervention from the Bank of Japan. While that was suspected earlier this week when a sharp rally occurred, it appears driven more by options traders than by a move from Japan. For now, it appears that the BoJ has gained credibility and that short speculators aren’t willing to challenge the bank, which has seemingly created an artificial floor for the currency. However, with a large volume of options expiring next week, this may not be a long-lasting phenomenon.
Strategy (22DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 0.00645 p Short 0.0065 p Short 0.0068 c Long 0.00685 c | 77% | +87.50 | -537.50 |
Long Strangle | Long 0.00645 p Long 0.00685 c | 11% | x | -112.50 |
Short Put Vertical | Long 0.00645 p Short 0.0065 p | 94% | +31.25 | -593.75 |
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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