Five futures in focus

S&P 500 Hits Another All-Time High; Energy Eyes Hurricane Helene

By:Christopher Vecchio, CFA

Also, five-year T-note, gold, natural gas and euro futures

Five Futures WTD Performance

  1. S&P 500 E-mini futures (/ES): -0.03% 

  2. 5-year T-note futures (/ZF): -0.08% 

  3. Gold futures (/GC): +0.41% 

  4. Natural gas futures (/NG): +2.51% 

  5. Euro futures (/6E): +0.35% 

A week after the Federal Reserve’s 50-basis-point (bps) in interest rates, and less than 24 hours after the People’s Bank of China’s wave of stimulus measures, financial markets are taking a beat to figure out the next directional move. U.S. equity markets are largely unchanged, although the S&P 500 did hit a fresh all-time high out of the gate. Bonds are pulling back further at the start of the day for the third consecutive session. Gold continues to push higher, although growth-sensitive commodities (silver, copper, crude oil) are struggling. Energy may stay volatile over the coming days, regardless of news out of the Middle East: Hurricane Helene is barreling through the Gulf of Mexico, likely to make landfall tomorrow.

Symbol: Equities 

Daily Change 

/ESZ4 

-0.03% 

/NQZ4 

-0.13% 

/RTYZ4 

+0.02% 

/YMZ4 

-0.02% 

S&P 500 futures (/ESZ4) are little changed this morning after hitting a fresh record high at the start of the U.S. trading session. The Nasdaq rose yesterday as well but remains a few percentage points away from its record high. KB Home (KBH) fell nearly 6% in pre-market trading after posting disappointing earnings results. Ford (F) fell 2.4% ahead of the bell following an analyst downgrade from Adam Jonas of Morgan Stanley (MS). Jonas cited increased competition from Chinese automakers.

Strategy: (51DTE, ATM) 

Strikes 

POP 

Max Profit 

Max Loss 

Iron Condor  

Long 5450 p 

Short 5475 p 

Short 6125 c 

Long 6150 c 

60% 

+262.50 

-987.50 

Short Strangle 

Short 5475 p 

Short 6125 c 

67% 

+2837.50 

Short Put Vertical 

Long 5450 p 

Short 5475 p 

82% 

+150 

-1100 

/ESZ4

Symbol: Bonds 

Daily Change 

/ZTZ4 

-0.02% 

/ZFZ4 

-0.08% 

/ZNZ4 

-0.14% 

/ZBZ4 

-0.4% 

/UBZ4 

-0.47% 

Bond yields are higher across much of the curve to start the day. We have several Treasury auctions on tap, with a five-year note auction and a two-year floating rate note (FRN) auction scheduled for today. After those offerings, the focus shifts to tomorrow when we will see data releases for unemployment claims, durable goods orders and a final GDP reading. PCE data later this week will also be an influential print.  

Strategy (58DTE, ATM) 

Strikes 

POP 

Max Profit 

Max Loss 

Iron Condor  

Long 107.75 p 

Short 108.5 p 

Short 112 c 

Long 112.75 c 

60% 

+218.75 

-531.25 

Short Strangle 

Short 108.5 p 

Short 112 c 

66% 

+476.56 

Short Put Vertical 

Long 107.75 p 

Short 108.5 p 

90% 

+109.38 

-640.63 

/ZFZ4

Symbol: Metals 

Daily Change 

/GCZ4 

+0.41% 

/SIZ4 

-0.72% 

/HGZ4 

+0.29% 

Gold prices (/GCZ4) continues to push higher into fresh record highs, as traders see the Fed now locked into their rate cutting cycle amid stable inflation. Gold is coming back into favor with investors who are realizing smaller returns on low-risk investments such as money market funds and certificates of deposit. Outside of a re-acceleration in inflation, gold is likely to see more gains over the short- to medium-term. 

Strategy (61DTE, ATM) 

Strikes 

POP 

Max Profit 

Max Loss 

Iron Condor  

Long 2500 p 

Short 2525 p 

Short 2850 c 

Long 2875 c 

62% 

+770 

-1730 

Short Strangle 

Short 2525 p 

Short 2850 c 

71% 

+3960 

Short Put Vertical 

Long 2500 p 

Short 2525 p 

83% 

+380 

-2120 

/GCZ4

Symbol: Energy 

Daily Change 

/CLZ4 

-1.37% 

/HOZ4 

-0.59% 

/NGZ4 

+2.51% 

/RBZ4 

-0.82% 

Natural gas prices (/NGZ4) moved higher to extend recent gains. The commodity is trading into its highest levels since early July. The situation in Ukraine is helping to push European prices higher, with the fighting in Ukraine’s Kursk region threatening critical infrastructure for Europe’s natural gas complex. Dutch TTF futures contract extended its premium against U.S. prices over the past week. That will pull cargoes in the Atlantic basin toward Europe, increasing export demand on Gulf Coast terminals, which are facing the prospect of Hurricane Helene this week. The Energy Information Administration (EIA) will report U.S. inventory data tomorrow.  

Strategy (51DTE, ATM) 

Strikes 

POP 

Max Profit 

Max Loss 

Iron Condor  

Long 62 p 

Short 63.5 p 

Short 79 c 

Long 80.5 c 

63% 

+400 

-1100 

Short Strangle 

Short 63.5 p 

Short 79 c 

70% 

+1690 

Short Put Vertical 

Long 62 p 

Short 63.5 p 

79% 

+250 

-1250 

/NGX4

Symbol: FX 

Daily Change 

/6AZ4 

-0.07% 

/6BZ4 

+0.02% 

/6CZ4 

+0.03% 

/6EZ4 

+0.35% 

/6JZ4 

-0.4% 

Rising energy prices in Europe are stoking speculation that the European Central Bank won't be able to cut rates as deep or consistently as the Fed: Odds of a 25-bps rate cut by the end of 2024 are slipping, per Eurozone Overnight Index Swaps (OIS). That's good news for the euro (/6EZ4), at least for today. Rising energy may likewise be pushing up global bond yields, which is one of the longstanding issues that the Japanese yen (/6JZ4) has been facing since the start of Russia's invasion of Ukraine.

Strategy (44DTE, ATM) 

Strikes 

POP 

Max Profit 

Max Loss 

Iron Condor  

Long 1.065 p 

Short 1.08 p 

Short 1.14 c 

Long 1.155 c 

65% 

+375 

-1500 

Short Strangle 

Short 1.08 p 

Short 1.14 c 

68% 

+650 

Short Put Vertical 

Long 1.065 p 

Short 1.08 p 

97% 

+50 

-1825 

/6EZ4

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 Westwatera 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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