Silver Rallies as S&P 500 Slips and Oil Falls
Silver Rallies as S&P 500 Slips and Oil Falls
Also, 10-year T-note, silver, crude oil and Australian dollar futures
- S&P 500 E-mini futures (/ES): -0.38%
- 10-year T-note futures (/ZN): -0.01%
- Silver futures (/SI): +1.38%
- Crude oil futures (/CL): -0.45%
- Australian dollar futures (/6A): -0.88%
A week devoid of meaningful earnings releases or U.S. macroeconomic data has traders in a holding pattern today. It should be noted that yesterday’s action saw the largest ever single-day retail inflow ($4.1 billion) into U.S. equities, a sign that dip buyers remain in full force despite equity indexes’ greater than 20% rally off the lows. As headlines trickle out of Washington, regarding the president’s new tax and spending plan, bond traders are keeping the long-end of the curve pinned near key thresholds: 10s near 4.5% and 30s near 5%. Amid the noise in stocks and bonds, precious metals have quietly returned to last week’s highs.
Symbol: Equities | Daily Change |
/ESM5 | -0.38% |
/NQM5 | -0.55% |
/RTYM5 | -0.13% |
/YMM5 | -0.21% |
S&P 500 futures (/ESM5) edged lower this morning, dropping about 0.40%, and putting prices at risk of breaking a six-day winning streak. The losses come as the S&P 500 trades just 3% from its all-time high back in February. Home Depot (HD) traded about 1% higher ahead of the bell despite the home improvement company posting a 0.3% drop in same-store sales. Tesla (TSLA) rose over 2% after Elon Musk committed to leading the company for the next five years. Viking Holdings (VIK) fell over 7% in early trading even after it posted impressive results.
Strategy: (41DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 5900 p Short 5925 p Short 6100 c Long 6125 c | 22% | +875 | -362.50 |
Short Strangle | Short 5925 p Short 6100 c | 49% | +8362.50 | x |
Short Put Vertical | Long 5900 p Short 5925 p | 62% | +337.50 | -912.50 |
Symbol: Bonds | Daily Change |
/ZTM5 | +0.01% |
/ZFM5 | 0% |
/ZNM5 | -0.01% |
/ZBM5 | -0.29% |
/UBM5 | -0.47% |
Treasuries continued to decline today, extending losses from yesterday as traders assess the effects of tariffs on countries. Analysts see the dollar weakening as Washington strikes deals with other countries. The recent downgrade to US credit is causing concern that pension funds abroad will have to cut their holdings of Treasuries. Pension fund managers in Hong Kong are already flagging the risk of having to sell Treasuries because of the credit rating, according to a Bloomberg report citing people familiar with the matter. The 10-year T-note futures (/ZNM5) fell 0.16% this morning.
Strategy (66DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 108.5 p Short 111 c Long 111.5 c | 30% | +328.13 | -171.88 |
Short Strangle | Short 109 p Short 111 c | 54% | +1593.75 | x |
Short Put Vertical | Long 108.5 p Short 109 p | 74% | +156.25 | -343.75 |
Symbol: Metals | Daily Change |
/GCM5 | +1.5% |
/SIN5 | +1.38% |
/HGN5 | -0.47% |
Silver prices (/SIN5) rose about 0.5% this morning against a weaker dollar. The weakness in equities is also flagging some safe-haven appeal for the precious metals, with gold prices (/GCM5) gaining about the same as silver this morning. Jamie Dimon, chair and CEO JPMorgan Chase, said Monday that the market isn’t yet seeing the full impact of tariffs. Precious metals prices may benefit if that outlook comes to pass.
Strategy (36DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 32.25 p Short 32.5 p Short 33.75 c Long 34 c | 22% | +950 | -300 |
Short Strangle | Short 32.5 p Short 33.75 c | 54% | +7830 | x |
Short Put Vertical | Long 32.25 p Short 32.5 p | 59% | +545 | -710 |
Symbol: Energy | Daily Change |
/CLM5 | -0.45% |
/HOM5 | -0.42% |
/NGM5 | +6.33% |
/RBM5 | -0.12% |
Crude oil prices (/CLN5) pulled back today, dropping by about 0.61%, after the commodity made gains on yesterday despite the US credit downgrade. Kazakhstan’s oil production rose 2% in May. OPEC is increasing production to dissuade those in the group that are overproducing, which includes Kazakstan. Energy traders are waiting for the American Petroleum Institute’s weekly inventory report.
Strategy (58DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 59 p Short 59.5 p Short 63.5 c Long 64 | 20% | +380 | -120 |
Short Strangle | Short 59.5 p Short 63.5 c | 52% | +4620 | x |
Short Put Vertical | Long 59 p Short 59.5 p | 56% | +190 | -310 |
Symbol: FX | Daily Change |
/6AM5 | -0.88% |
/6BM5 | +0.08% |
/6CM5 | +0.17% |
/6EM5 | +0.2% |
/6JM5 | +0.2% |
Australian dollar futures (/6AM5) fell 0.88% this morning. Traders are waiting for a rate decision from the Reserve Bank of Australia (RBA) later this week when they’re expected to cut interest rates. If policymakers pair that rate cut with dovish guidance, then the Aussie may see more pain ahead. Despite the drop in the Australian currency, the dollar remains weaker against most of its peers this morning.
Strategy (44DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 0.63 p Short 0.635 p Short 0.65 c Long 0.655 c | 33% | +310 | -190 |
Short Strangle | Short 0.635 p Short 0.65 c | 55% | +1110 | x |
Short Put Vertical | Long 0.63 p Short 0.635 p | 68% | +160 | -340 |
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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