Nasdaq 100 Gyrates as NVDA Rises After Earnings
U.S. equity market futures traded higher through overnight hours before coming back down to earth as soon as the cash equity bell rang today in New York. Traders are grappling with the implications of the Nvidia (NVDA) earnings report, which briefly pushed the shares to fresh all-time highs at the open. Elsewhere, amid continued strength in the labor market, U.S. Treasury yields are continuing their chop. Metals are mixed, while attention in commodities remains on natural gas, which has surged this week as tensions in Eastern Europe percolate. The U.S. dollar is mixed, with the Japanese yen leading and the euro lagging.
Symbol: Equities | Daily Change |
/ESZ4 | -0.28% |
/NQZ4 | -0.41% |
/RTYZ4 | +0.19% |
/YMZ4 | -0.08% |
The Nasdaq 100 (/NQZ4) had traded back to highs not seen since last Friday in the wake of the NVDA and Snowflake (SNOW) earnings reports but sell orders at the open have since seen all overnight gains lost. Nevertheless, both earnings reports point to ongoing momentum for the AI narrative, and volatility has dropped (in both spot VIX and in /VX futures) over the past 24 hours. Market liquidity may soon begin to thin out as traders de-risk ahead of next week’s holiday trading schedule.
Strategy: (57DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 19000 p Short 19250 p Short 22250 c Long 22500 c | 64% | +1240 | -3760 |
Short Strangle | Short 19250 p Short 22250 c | 70% | +5550 | x |
Short Put Vertical | Long 19000 p Short 19250 p | 87% | +555 | -4445 |
Symbol: Bonds | Daily Change |
/ZTZ4 | +0.02% |
/ZFZ4 | +0.09% |
/ZNZ4 | +0.16% |
/ZBZ4 | +0.24% |
/UBZ4 | +0.25% |
Weekly U.S. jobless claims fell to their lowest level since April, underscoring the Federal Reserve’s ongoing shift away from a dovish stance and toward neutrality; discussions around ending the rate cut cycle sometime in 2025 are already taking place. Dissent among members of the Federal Open Market Committee (FOMC) likewise indicates a more deliberate pace of cuts moving forward: Three-Month SOFR rates (/SR3Z4) are discounting a mere 54% chance of a 25-basis-point (bps) rate cut in December. The long-end of the curve is seeing strength in the wake of yesterday’s 20-year bond auction.
Strategy (64DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 110 p Short 112 p Short 122 c Long 124 c | 64% | +562.50 | -1437.50 |
Short Strangle | Short 112 p Short 122 c | 69% | +1234.38 | x |
Short Put Vertical | Long 110 p Short 112 p | 85% | +296.88 | -1703.13 |
Symbol: Metals | Daily Change |
/GCZ4 | +0.8% |
/SIZ4 | -0.05% |
/HGZ4 | -0.75% |
Metals are mixed again although all eyes are on gold prices (/GCZ4), which have retraced half of their losses since the start of November. Gold volatility has likewise been rising, which has been a reliable indicator of positive momentum throughout 2024. Elsewhere, copper prices (/HGZ4) continue to struggle to rebuild momentum as concern about Chinese growth persists in the face of the threat of a new phase of the U.S.-China trade war.
Strategy (68DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 2475 p Short 2500 p Short 2850 c Long 2875 c | 64% | +650 | -1850 |
Short Strangle | Short 2500 p Short 2850 c | 71% | +3570 | x |
Short Put Vertical | Long 2475 p Short 2500 p | 87% | +250 | -2250 |
Symbol: Energy | Daily Change |
/CLF5 | +1.59% |
/HOZ4 | +1.22% |
/NGF5 | +5.92% |
/RBZ4 | +0.49% |
Surging European natural gas prices are spilling over across the pond. American natural gas prices (/NGF5) have flirted with a gain of nearly 20% this week alone as echoes of 2022 ring through markets: ratcheting tensions between Russia-Ukraine harken a disruption of energy supplies as winter looms. A squeeze in natural gas prices akin to what happened in 2022 is a low probability, but it’s a non-zero possibility that can’t be dismissed.
Strategy (68DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 2.25 p Short 2.5 p Short 4.5 c Long 4.75 c | 64% | +640 | -1860 |
Short Strangle | Short 2.5 p Short 4.5 c | 72% | +2390 | x |
Short Put Vertical | Long 2.25 p Short 2.5 p | 77% | +380 | -2120 |
Symbol: FX | Daily Change |
/6AZ4 | +0.32% |
/6BZ4 | -0.17% |
/6CZ4 | +0.1% |
/6EZ4 | -0.18% |
/6JZ4 | +0.85% |
Both the British pound (/6BZ4) and the euro (/6EZ4) are struggling today bvs. the U.S. dollar in an environment that is shaping up like what transpired in summer 2022: rapidly increasing European natural gas prices darkened the economic outlook and led to a crippling wave of inflation. Beset by already-weak growth, another surge in European energy prices could bring about stagflation to both the Eurozone and the U.K.
Strategy (43DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 1.02 p Short 1.03 p Short 1.08 c Long 1.09 c | 64% | +337.50 | -912.50 |
Short Strangle | Short 1.03 p Short 1.08 c | 69% | +712.50 | x |
Short Put Vertical | Long 1.02 p Short 1.03 p | 90% | +137.50 | -1112.50 |
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
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.