S&P 500 Steady as Traders Prepare for Magnificent Seven Earnings
S&P 500 E-mini futures (/ES): +0.08%
30-year T-note futures (/ZB): +0.34%
Silver futures (/SI): -0.50%
Natural gas futures (/NG): -2.76%
Japanese yen futures (/6J): +0.59%
Earnings are streaming in as we move through a politically volatile week of trading. The S&P 500’s fear gauge, the VIX, remains elevated near the 15 handle, as traders digest non-stop political headlines about the 2024 Presidential race.
United Parcel Service (UPS) fell over 10% at the open after the delivery company cut its guidance. Elsewhere, the dollar rose on euro weakness and crude oil prices fell. Ether exchange-traded funds (ETFs) are set to start trading today.
Symbol: Equities | Daily Change |
/ESU4 | +0.08% |
/NQU4 | +0.01% |
/RTYU4 | -0.24% |
/YMU4 | -0.05% |
S&P 500 futures are slightly higher this morning as traders prepare for Tesla (TSLA) and Alphabet (GOOG) to kick off the earnings season for the Magnificent Seven, with both companies scheduled to report earnings after market close.
General Motors (GM) beat estimates and raised its full-year guidance this morning, which pushed the stock nearly 2% higher in pre-market trading.
Strategy: (38DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 5550 p Short 5560 p Short 5670 c Long 5675 c | 61% | +275 | -225 |
Short Strangle | Short 5560 p Short 5670 c | 49% | +6587.50 | x |
Short Put Vertical | Long 5550 p Short 5560 p | 61% | +170 | -330 |
Symbol: Bonds | Daily Change |
/ZTU4 | +0.03% |
/ZFU4 | +0.09% |
/ZNU4 | +0.13% |
/ZBU4 | +0.34% |
/UBU4 | +0.32% |
The 30-year T-bond futures (/ZBU4) rose 0.34% this morning as traders continue to grapple with a quickly changing political landscape in the United States following President Joe Biden’s withdrawal from the 2024 race. The Treasury will auction off two-year notes today. Durable goods and U.S. gross domestic product data due later this week could influence the Treasury market through interest rate cut bet odds. Traders are pricing in a September rate cut from the Federal Reserve.
Strategy (31DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 117 p Short 118 p Short 121 c Long 122 c | 39% | +578.13 | -421.88 |
Short Strangle | Short 118 p Short 121 c | 58% | +1765.63 | x |
Short Put Vertical | Long 117 p Short 118 p | 68% | +312.50 | -687.50 |
Symbol: Metals | Daily Change |
/GCQ4 | +0.46% |
/SIU4 | -0.50% |
/HGU4 | -1.37% |
Silver prices (/SIU4) fell 0.26% this morning, with prices now challenging the June swing low around the 29 level. A break lower could threaten further downside. A slightly stronger dollar is posing a headwind to the metal’s fundamental case. Meanwhile, gold prices are benefiting from political uncertainty in the United States.
Strategy (35DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 28.5 p Short 28.75 p Short 29.75 c Long 30 c | 21% | +975 | -275 |
Short Strangle | Short 28.75 p Short 29.75 c | 54% | +7315 | X |
Short Put Vertical | Long 28.5 p Short 28.75 p | 59% | +570 | -680 |
Symbol: Energy | Daily Change |
/CLU4 | -1.08% |
/HOQ4 | -0.55% |
/NGU4 | -2.76% |
/RBQ4 | -0.68% |
Natural gas (/NGU4) is giving back some of yesterday’s gains, dropping about 2.76% this morning. Feedgas demand is rising after Freeport resumed operations after Hurricane Beryl damaged some equipment at the plant. That will likely help demand on the export side but there is still plenty of supply in the market and producers are unlikely to cut now because of low prices with the winter so close. That said, we could see selling into strength over the short term.
Strategy (35DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 2.1 p Short 2.15 p Short 2.4 c Long 2.45 c | 26% | +370 | -130 |
Short Strangle | Short 2.15 p Short 2.4 c | 54% | +2360 | X |
Short Put Vertical | Long 2.1 p Short 2.15 p | 57% | +210 | -290 |
Symbol: FX | Daily Change |
/6AU4 | -0.30% |
/6BU4 | -0.07% |
/6CU4 | -0.06% |
/6EU4 | -0.32% |
/6JU4 | +0.59% |
Comments from Japanese officials overnight helped drive yen futures (/6JU4) higher. The Bank of Japan (BOJ) meets later this month on July 31. Markets expect no change to the bank’s interest rate but there is a small chance the BOJ could surprise with a rate hike. Breaking above last week’s swing high of 0.0064925 is in the cards if strength continues through today.
Strategy (45DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 0.00635 p Short 0.0064 p Short 0.00655 c Long 0.0066 c | 34% | +387.50 | -237.50 |
Short Strangle | Short 0.0064 p Short 0.00655 c | 56% | +1350 | X |
Short Put Vertical | Long 0.00635 p Short 0.0064 p | 69% | +237.50 | -387.50 |
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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