S&P 500 Steps Back as Traders Await NVDA Earnings
S&P 500 Steps Back as Traders Await NVDA Earnings
Also two-year T-note, silver, natural gas and Australian dollar futures
- S&P 500 100 E-mini futures (/ES): -0.35%
- Two-year T-note futures (/ZT): +0.10%
- Silver futures (/SI): -1.32%
- Natural gas futures (/NG): -1.31%
- Australian dollar futures (/6A): +0.57%
On the other side of the holiday weekend and ahead of a fairly quiet week on the economic calendar, U.S. equity markets are trading modestly lower and bonds are mixed across the curve. The fact is that Nvidia’s (NVDA) earnings report after the bell tomorrow is the most important event of the week, a make-or-break moment for tech stocks looking for some evidence to substantiate the AI hype cycle.
Symbol: Equities | Daily Change |
/ESH4 | -0.35% |
/NQH4 | -0.41% |
/RTYH4 | -0.97% |
/YMH4 | -0.34% |
U.S. equity markets are trading lower after the long weekend, led lower by the Russell 2000 (/RTYH4) as Super Micro Computer (SMCI) continues to experience sharp downside price action. Semiconductors are leading the way to the downside, with Nvidia (NVDA) off around 5% early in trading. Technical uptrends in both the S&P 500 (/ESH4) and Nasdaq 100 (/NQH4) are beginning to come under pressure.
Strategy: (45DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 4900 p Short 4940 p Short 5170 c Long 5200 c | 38% | +837.50 | -1162.50 |
Short Strangle | Short 4940 p Short 5170 c | 55% | +4325 | x |
Short Put Vertical | Long 4900 p Short 4940 p | 72% | +407.50 | -1592.50 |
Symbol: Bonds | Daily Change |
/ZTH4 | +0.10% |
/ZFH4 | +0.15% |
/ZNH4 | +0.11% |
/ZBH4 | -0.11% |
/UBH4 | -0.15% |
Bonds are mixed across the curve but have been recovering over the course of trading today. Three Treasury auctions in the coming days offer meaningful waypoints for traders, though the 20-year bond auction tomorrow is most likely the most significant of the trio (the others being two-year FRN and 10-year TIPS auctions). A slew of Federal Reserve speakers in the coming days are also likely to spark price action.
Strategy (31DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 102 p Short 102.125 p Short 103.125 c Long 103.5 c | 45% | +125 | -125 |
Short Strangle | Short 102.125 p Short 103.125 c | 57% | +500 | x |
Short Put Vertical | Long 102 p Short 102.125 p | 87% | +62.50 | -187.50 |
Symbol: Metals | Daily Change |
/GCJ4 | +0.78% |
/SIH4 | -1.32% |
/HGH4 | +0.04% |
A Chinese stimulus announcement overnight did little to boost base metals, with spot iron ore prices tumbling and copper prices (/HGH4) failing to see any significant bounce. The pullback in U.S. Treasury yields at the front end of the yield curve may be helping lift gold prices (/GCJ4), while traders are taking profit in silver (/SIH4) after baby bullion rallied to its highest level in a month at the end of last week.
Strategy (34DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 22.75 p Short 23 p Short 23.75 c Long 24 c | 25% | +920 | -330 |
Short Strangle | Short 23 p Short 23.75 c | 55% | +4670 | x |
Short Put Vertical | Long 22.75 p Short 23 p | 63% | +495 | -755 |
Symbol: Energy | Daily Change |
/CLH4 | -0.33% |
/HOH4 | -0.48% |
/NGH4 | -1.31% |
/RBH4 | -1.48% |
Natural gas futures (/NGH4) traded 1.24% lower this morning, pushing the commodity to its lowest level in nearly 30 years as a warmer-than-average winter in the United States continues to dampen demand. These prices, along with an elevated level of short bets, may invite speculators to try their hand at a long bet. But weather forecasts remain on the warm side for the next couple of weeks.
Strategy (34DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 1.35 p Short 1.4 p Short 1.9 c Long 1.95 c | 50% | +170 | -330 |
Short Strangle | Short 1.4 p Short 1.9 c | 61% | +890 | x |
Short Put Vertical | Long 1.35 p Short 1.4 p | 73% | +100 | -400 |
Symbol: FX | Daily Change |
/6AH4 | +0.57% |
/6BH4 | +0.26% |
/6CH4 | -0.15% |
/6EH4 | +0.38% |
/6JH4 | +0.12% |
Australian dollar futures (/6AH4) quickly shrugged off a decline following yesterday’s minutes from the Reserve Bank of Australia (RBA) and the currency is heading higher for a fourth straight day as traders continue to price out rate cuts from the Federal Reserve. If the RBA maintains a relatively hawkish position to the Fed, the aussie may keep some of its tailwinds through the end of February.
Strategy (45DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 0.635 p Short 0.64 p Short 0.68 c Long 0.685 c | 69% | +110 | -390 |
Short Strangle | Short 0.64 p Short 0.68 c | 73% | +310 | x |
Short Put Vertical | Long 0.635 p Short 0.64 p | 89% | +60 | -440 |
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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