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Traders: Your New Essential Way to Start the Day

By:Christopher Vecchio, CFA

Each weekday morning: Five futures in focus

Intraday price percent change chart for /ES, /ZN, /GC, /CL, /6J
Intraday price percent change chart for /ES, /ZN, /GC, /CL, /6J
  • E-mini S&P 500 index futures (/ES): +0.23%
  • 10-year U.S. Treasury notes (/ZN): -0.09%
  • Gold futures (/GC): +0.03%
  • Crude Oil (/CL): +1.26%
  • Japanese yen futures (/6J): +0.31%

Mounting concerns over global growth, this time around concerns over the Chinese property market, continue to plague markets, with major Asian equity indexes falling to their lowest levels since March.

Data releases from the Eurozone and the U.K. point to an increased likelihood of elevated inflation amid slowing growth, stirring stagflation concerns. A weak Japanese government bond auction overnight has started to boost speculation that the Bank of Japan might be forced away from its yield curve control (YCC) policy, which in turn has helped pressure global bond yields to multi-year highs.

Symbol: Equities

Daily Change

/ESU3

+0.23%

/NQU3

+0.15%

/RTYU3

+0.22%

/YMU3

+0.26%

The bulk of earnings season is behind U.S. equity traders, with the focus increasingly shifting to a deteriorating macroeconomic outlook. But the technical damage has been done. Both /ESU3 and /NQU3 have breached their uptrends from the March and May swing lows. Directionally, the path of least resistance appears to be lower in equity index futures in the near-term.

Strategy (0DTE, ATM)

Strikes

POP

Max Profit

Max Loss

Iron condor

Long 4420p

Short 4425p

Short 4435c

Long 4440c

23%

+195

-55

Long strangle

Long 4425p

Long 4435c

47%

x

-837.50

Short put vertical

Long 4420p

Short 4425p

60%

+87.50

-162.50

ES

Symbol: Bonds

Daily Change

/ZTU3

+0.08%

/ZFU3

-0.01%

/ZNU3

-0.17%

/ZBU3

-0.50%

/UBU3

-0.75%

Global bond yields continue to push higher, with curve steepening apparent for U.S. Treasuries, German bunds, and U.K. gilts. The higher for longer mentality is setting in further in recent days, as it appears that major central banks will be dealing with elevated inflation through the end of 2023. The selloff in /ZNU3 has pushed the 10-year yield to its highest closing level since 2008.

Strategy (1DTE, ATM)

Strikes

POP

Max Profit

Max Loss

Iron condor

Long 109p

Short 109.25p

Short 109.75c

Long 110c

50%

125

-125

Long strangle

Long 109.25p

Long 109.75c

40%

X

-218.75

Short put vertical

Long 109p

Short 109.25p

73%

+62.50

-187.50

ZN

Symbol: Metals

Daily Change

/GCU3

-0.09%

/SIU3

+1.09%

/HGU3

+0.92%

Gold futures continued lower after their weak close on Wednesday, after hawkish Fed comments sparked a bond selloff that sent Treasury yields higher, denting the appeal of gold—a non-interest-bearing asset. Gold volatility rose +4% per the Cboe’s Gold Volatility Index. /GC is testing the 1,900 psychological level, which bears attempted to break during the Wednesday trading session.

Strategy (1DTE, ATM)

Strikes

POP

Max Profit

Max Loss

Iron condor

Long 1890p

Short 1895p

Short 1905c

Long 1905c

35%

+330

-160

Long strangle

Long 1895p

Long 1905c

44%

x

-890

Short put vertical

Long 1890p

Short 1895p

84%

+70

-430

GC

Symbol: Energy

Daily Change

/CLU3

+1.42%

/NGU3

+2.66%

Crude oil futures are rebounding following Wednesday’s data release show a six-million-barrel draw in U.S. crude inventories, per government data. Traders have been selling oil as worries mount over China, where a trust company exposed to real estate missed payments on its investments this week, deepening the property sector slump. /CL’s technical posture is muddied by the recent selloff; RSI crossed below its 50 mid-point level, while a golden cross between the 50- and 200-day simple Moving Averages nears.

Strategy (0DTE, ATM)

Strikes

POP

Max Profit

Max Loss

Iron Condor

Long 79.5p

Short 80p

Short 81c

Long 81.5c

52%

+180

-320

Long Strangle

Long 80p

Long 81c

41%

x

-290

Short Put Vertical

Long 79.5p

Short 80p

69%

+110

-390

CL

Symbol: FX

Daily Change

/6AU3

+0.01%

/6BU3

+0.28%

/6CU3

+0.18%

/6EU3

+0.13%

/6JU3

+0.17%

A weak Japanese 20-year government bond auction renewed speculation that the Bank of Japan may not be able to maintain YCC, even if it still wants to do so. After rising U.S. Treasury yields helped prop up the U.S. dollar in recent session, a push higher globally has helped diminish the greenback’s relative advantage, at least in the short term.

Strategy (22DTE, ATM)

Strikes

POP

Max Profit

Max Loss

Iron condor

Long 0.00685p

Short 0.006875p

Short 0.006295c

Long 0.00695c

22%

+262.50

-50

Long strangle

Long 0.006875p

Long 0.006925c

44%

x

-1300

Short put vertical

Long 0.006825p

Short 0.00685p

66%

+125

-187.50

6j

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

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.

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