Five futures in focus

Consumers Are Still Spending, Making a 50bps Interest Rate Cut Less Likely

By:Thomas Westwater

Also, 30-year T-bond, silver, crude oil and Japanese yen futures

Five Futures WTD Performance

  1. S&P 500 E-mini futures (/ES): +0.43% 

  2. 30-year T-bond futures (/ZB): +0.15% 

  3. Silver futures (/SI): -0.21% 

  4. Crude oil futures (/CL): +0.51% 

  5. Japanese yen futures (/6J): -0.39% 

The last big data point to drop ahead of tomorrow’s Federal Reserve interest rate decision tempered expectations for the 50-basis-point (bps)rate cut, with retail sales data showing the U.S. consumer continues to spend money. U.S. equity futures moved higher after the opening bell, with hopes that a 25bps rate cut will signal confidence in the soft-landing narrative the Fed has chased for years now. Elsewhere, the dollar rebounded, and crude oil prices rose. About 12% of oil production in the Gulf of Mexico remains shut down after Hurricane Francine moved through Louisiana.  

Symbol: Equities 

Daily Change 

/ESZ4 

+0.43% 

/NQZ4 

+0.63% 

/RTYZ4 

+0.81% 

/YMZ4 

+0.29% 

Traders appear confident ahead of the expected Fed rate cut, as S&P 500 futures (/ESZ4) rose about 0.5% Tuesday morning. Intel (INTC) is up 5% in pre-market trading after it was revealed the chip maker would spin off a foundry business. That would enable it to raise money more easily with the business segmented from its larger operations, which haven’t impressed investors in recent years. Microsoft (MSFT) is also making gains after the company boosted its quarterly dividend. This morning’s retail sales data also firmed up expectations for a soft landing, which added a tailwind to market sentiment.

Strategy: (44DTE, ATM) 

Strikes 

POP 

Max Profit 

Max Loss 

Iron Condor  

Long 5650 p 

Short 5660 p 

Short 5790 c 

Long 5800 c 

17% 

+387.50 

-117.50 

Short Strangle 

Short 5660 p 

Short 5790 c 

48% 

+7850 

Short Put Vertical 

Long 5650 p 

Short 5660 p 

61% 

+150 

-350 

/ESZ4

Symbol: Bonds 

Daily Change 

/ZTZ4 

-0.08% 

/ZFZ4 

-0.11% 

/ZNZ4 

-0.09% 

/ZBZ4 

+0.15% 

/UBZ4 

+0.36% 

The retail sales data showed the Fed isn’t facing harsh conditions as it prepares to cut interest rates this week. That sent bond yields slightly lower along the middle- and long-ends of the curve. 30-year T-bond futures (/ZBZ4) rose 0.07% ahead of the New York open. The Treasury will auction 20-year bonds today. 

Strategy (38DTE, ATM) 

Strikes 

POP 

Max Profit 

Max Loss 

Iron Condor  

Long 125 p 

Short 126 p 

Short 129 c 

Long 130 c 

34% 

+640.63 

-359.38 

Short Strangle 

Short 126 p 

Short 129 c 

57% 

+2265.63 

Short Put Vertical 

Long 125 p 

Short 126 p 

69% 

+343.75 

-656.25 

/ZBZ4

Symbol: Metals 

Daily Change 

/GCZ4 

-0.23% 

/SIZ4 

-0.21% 

/HGZ4 

-0.08% 

Silver prices (/SIZ4) are stalling near levels not traded at since mid-July, as the dollar catches some bids ahead of reaching its August low. The upbeat economic conditions highlighted by the retail sales data reduced the chances the Fed would cut interest rates by 50 bps, which would likely benefit the non-interest-bearing asset. Meanwhile, gold prices (/GCZ4) also face some pressure this morning.  

Strategy (41DTE, ATM) 

Strikes 

POP 

Max Profit 

Max Loss 

Iron Condor  

Long 30.25 p 

Short 30.5 p 

Short 32 c 

Long 32.25 c 

22% 

+975 

-295 

Short Strangle 

Short 30.5 p 

Short 32 c 

56% 

+9525 

Short Put Vertical 

Long 30.25 p 

Short 30.5 p 

58% 

+570 

-680 

/SIZ4

Symbol: Energy 

Daily Change 

/CLX4 

+0.51% 

/HOV4 

+0.29% 

/NGV4 

+1.81% 

/RBV4 

+0.16% 

Today is all about inventory numbers from the American Petroleum Institute (API). Crude oil prices (/CLX4) rose slightly this morning, continuing a trend higher from the Sept. 10 swing low, but there is still plenty of work to do to recover from losses suffered earlier this month. China’s refinery activity dropped for a fifth month, which kept traders on edge over the faltering demand story that has plagued oil recently.  

Strategy (30DTE, ATM) 

Strikes 

POP 

Max Profit 

Max Loss 

Iron Condor  

Long 67.5 p 

Short 68 p 

Short 71.5 c 

Long 72 c 

23% 

+370 

-130 

Short Strangle 

Short 68 p 

Short 71.5 c 

54% 

+3510 

Short Put Vertical 

Long 67.5 p 

Short 68 p 

60% 

+180 

-320 

/CLX4

Symbol: FX 

Daily Change 

/6AZ4 

+0.10% 

/6BZ4 

-0.07% 

/6CZ4 

-0.07% 

/6EZ4 

-0.05% 

/6JZ4 

-0.39% 

Japanese yen futures (/6JZ4) declined slightly today after reaching levels from early January. The reduction in the chances for a larger Fed rate cut is pulling on the Japanese currency, although it should remain slated for more gains through the year as the policy divergence between the Fed and Bank of Japan shifts. That said, buying into weakness is likely the move to watch in the yen.  

Strategy (52DTE, ATM) 

Strikes 

POP 

Max Profit 

Max Loss 

Iron Condor  

Long 0.00705 p 

Short 0.0071 p 

Short 0.0073 c 

Long 0.00735 c 

28% 

+437.50 

-187.50 

Short Strangle 

Short 0.0071 p 

Short 0.0073 c 

57% 

+2412.50 

Short Put Vertical 

Long 0.00705 p 

Short 0.0071 p 

64% 

+275 

-350 

/6JZ4

Thomas Westwatera tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater

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 brokeropen 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.

Related Posts

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.