Nasdaq Falls Alongside Gold as Traders Watch Middle East
Also, 10-year T-notes, gold, crude oil, and Japanese yen futures
- Nasdaq 100 e-mini futures (/NQ): -0.46%
- 10-year T-note futures (/ZN): -0.31%
- Gold futures (/GC): -0.28%
- Crude oil (/CL): -1.15%
- Japanese yen Futures (/6J): -0.06%
U.S. equity futures fell as the 10-year note’s yield rose above 5% this morning amid a broad risk-off push across financial markets that started overnight in Asian trading. Rising geopolitical tensions, a so-far tepid earnings season and firming Federal Reserve rate hike bets are causing investors to pull back on risk assets.
Symbol: Equities | Daily Change |
/ESZ3 | -0.45% |
/NQZ3 | -0.46% |
/RTYZ3 | -0.36% |
/YMZ3 | -0.45% |
Nasdaq 100 E-mini futures (/NQZ3) are down 0.5% this morning, or 65 points, as traders continue to sell from Friday’s close. China launched a probe into Foxconn Technology Group (2354.TW) which is causing concerns for Apple (AAPL) investors. Okta (OKTA), a favorite technology stock, is down 4% this morning after the company reported a data reach. Chevron (CVX) is trading lower after the energy company announced it would buy Hess (HES).
Strategy: (52DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 14,250 p Short 14,300 p Short 14,900 c Long 15,000 c | 57% | +1,235 | -765 |
Long Strangle | Long 14,250 p Long 15,000 c | 66% | x | -14,055 |
Short Put Vertical | Long 14,250 p Short 14,300 p | 54% | +330 | -670 |
Symbol: Bonds | Daily Change |
/ZTZ3 | -0.05% |
/ZFZ3 | -0.18% |
/ZNZ3 | -0.31% |
/ZBZ3 | -0.43% |
/UBZ3 | -0.42% |
Bond traders are selling Treasuries, pushing yields up across the curve. Most notably, the 10-year yield briefly traded above a 5% yield this morning. That psychological level is significant for investors and helps explain the selling in equities as rate traders increase their bets on the Federal Reserve. Economic data and a speech by Fed Chair Jerome Powell will be in focus this week.
Strategy (32DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 104.5 p Short 105 p Short 106.5 c Long 107 c | 28% | +343.75 | -156.25 |
Long Strangle | Long 104.5 p Long 107 c | 42% | x | -1,203 |
Short Put Vertical | Long 104.5 p Short 105 p | 67% | +171.88 | -328.13 |
Symbol: Metals | Daily Change |
/GCZ3 | -0.39% |
/SIZ3 | -1.36% |
/HGZ3 | +0.08% |
Gold prices (/GCZ3) fell as higher yields reduced the precious metal’s appeal despite equities selling off as investors ditch the non-interest-bearing asset amid rising geopolitical tensions and firming Fed bets. Economic data due out later this week, including purchasing managers’ index (PMI) data on Tuesday, will help guide rate odds.
Strategy (35DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 1960 p Short 1965 p Short 2010 c Long 2015 c | 20% | +390 | -110 |
Long Strangle | Long 1960 p Long 2015 c | 46% | x | -4,910 |
Short Put Vertical | Long 1960 p Short 1965 p | 61% | +230 | -270 |
Symbol: Energy | Daily Change |
/CLZ3 | -1.14% |
/NGZ3 | -0.28% |
Crude oil prices (/CLZ3) fell today as traders continued to watch the Israel-Hamas conflict, and diplomats continue their efforts to find ways to de-escalate the situation before a planned ground invasion of the Gaza Strip. If those efforts fall apart, however, it could make energy traders nervous and reverse oil prices higher.
Strategy (52DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 83 p Short 83.5 p Short 90 c Long 90.5 c | 19% | +380 | -120 |
Long Strangle | Long 83 p Long 90.5 c | 47% | x | -7,080 |
Short Put Vertical | Long 83 p Short 83.5 p | 56% | +230 | -270 |
Symbol: FX | Daily Change |
/6AZ3 | -0.02% |
/6BZ3 | +0.07% |
/6CZ3 | -0.14% |
/6EZ3 | +0.07% |
/6JZ3 | -0.06% |
The Japanese yen is flirting with levels where a possible intervention by the Bank of Japan could occur. The exchange rate for dollar-yen is nearing a 33-year high that may trigger such an intervention, although the orderly pace lower may see price continue to slip because it may ward off action from Japan’s Ministry of Finance, which would direct the BoJ’s currency policy. With Treasury yields increasing, it will be hard for JPY to stage a comeback.
Strategy (49DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 0.0066 p Short 0.00665 p Short 0.0068 c Long 0.00685 c | 34% | +350 | -275 |
Long Strangle | Long 0.0066 p Long 0.00685 c | 40% | x | -900 |
Short Put Vertical | Long 0.0066 p Short 0.00665 p | 73% | +187.50 | -437.50 |
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
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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