Nasdaq 100 Continues Tepid Rebound Ahead of Tech Earnings
Nasdaq 100 Continues Tepid Rebound Ahead of Tech Earnings
Also, 5-year T-note, silver, crude oil and British pound futures
Nasdaq 100 e-mini futures (/NQ): +0.40%
5-year T-note futures (/ZF): -0.10%
Silver futures (/SI): +0.59%
Crude oil futures (/CL): -1.03%
British pound futures (/6B): +0.22%
Equity futures are recovering Tuesday morning after a series of mixed earnings reports from Wall Street.
General Motors (GM) raised its full-year guidance after setting a first-quarter sales record, which injected a sense of optimism into economic expectations for the United States.
PepsiCo (PEP) also rose slightly after a revenue beat. Earnings will likely continue to dictate market sentiment this week, with plenty of heavy hitters left on the calendar.
The focus this season will hinge around tech, specifically the outlook on demand for the chip sector and the broader guidance on artificial intelligence. U.S. new home sales for March and April U.S. purchasing managers' index (PMI) updates from S&P Global are due this morning.
Symbol: Equities | Daily Change |
/ESM4 | +0.35% |
/NQM4 | +0.40% |
/RTYM4 | -0.21% |
/YMM4 | +0.27% |
Nasdaq moves higher
Nasdaq futures (/NQM4) led equity markets higher on Tuesday morning ahead of the opening bell as investors eye big tech earnings. Lockheed Martin Corp (LMT) rose in pre-market trading after posting an impressive beat in sales and earnings, helped by the ongoing conflicts in Eastern Europe and the Middle East.
Tesla Inc (TSLA) will report after the bell today to kick off the season for the Magnificent Seven. Those earnings will likely be paramount to how much risk traders want to take moving forward.
Strategy: (58DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 16000 p Short 16250 p Short 18750 c Long 19000 c | 62% | +1420 | -3580 |
Short Strangle | Short 16250 p Short 18750 c | 67% | +5395 | x |
Short Put Vertical | Long 16000 p Short 16250 p | 86% | +765 | -4235 |
Symbol: Bonds | Daily Change |
/ZTM4 | -0.05% |
/ZFM4 | -0.10% |
/ZNM4 | -0.16% |
/ZBM4 | -0.33% |
/UBM4 | -0.39% |
Treasury yields rise
Treasury yields rose this morning following an overnight move in Europe where strong economic data eased worries over the economic outlook. It’s a busy week for Treasury markets, with several potentially high-impact auctions on tap, starting with today’s two-year note auction. Two-year floating rate notes (FRNs) and five-year notes will have auctions tomorrow, followed by a seven-year note auction on Thursday.
Strategy (31DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 103.25 p Short 103.5 p Short 106.5 c Long 106.75 c | 64% | +70.31 | -179.69 |
Short Strangle | Short 103.5 p Short 106.5 c | 71% | +296.88 | x |
Short Put Vertical | Long 103.25 p Short 103.5 p | 89% | +39.06 | -210.94 |
Symbol: Metals | Daily Change |
/GCM4 | -0.94% |
/SIK4 | -0.59% |
/HGK4 | -1.71% |
Silver futures drops
Silver futures (/SIK4) extended yesterday’s selloff this morning, dropping about 0.72% as yields rose amid easing tensions across the Middle East. The odds that rate cuts come later rather than sooner is also hitting demand for the precious metals and that demand may come under more pressure if tech earnings impress and manage to pull away some capital and haven flows from gold and silver.
Strategy (63DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 23.75 p Short 24 p Short 30 c Long 30.25 c | 65% | +315 | -935 |
Short Strangle | Short 24 p Short 30 c | 73% | +3020 | x |
Short Put Vertical | Long 23.75 p Short 24 p | 85% | +125 | -1125 |
Symbol: Energy | Daily Change |
/CLM4 | -1.03% |
/HOK4 | -1.34% |
/NGK4 | -2.35% |
/RBK4 | -1.42% |
Crude oil moves lower
Crude oil futures (/CLM4) moved lower as the latest round of tensions between Israel and Iran fades, with the prospect of additional escalations fading for now.
Traders will likely keep the commodity propped above the $80 per barrel handle as sanctions on Iran are hashed out by the U.S. and the European Union. Traders are watching today’s inventory report from the American Petroleum Institute (API), due out at 15:30 UTC (10:30 a.m. Central Time).
Strategy (52DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 72 p Short 73 p Short 89 c Long 90 c | 64% | +260 | -740 |
Short Strangle | Short 73 p Short 89 c | 71% | +1600 | x |
Short Put Vertical | Long 72 p Short 73 p | 82% | +140 | -860 |
Symbol: FX | Daily Change |
/6AM4 | +0.01% |
/6BM4 | +0.22% |
/6CM4 | -0.04% |
/6EM4 | +0.08% |
/6JM4 | -0.02% |
A rebound for the pound
The British pound (/6BM4) rebounded Tuesday after traders sold the currency on a shifting outlook for the Bank of England.
Strong economic data in the United Kingdom’s services sector for April helped stem the recent losses. However, with the BOE remaining on a likely dovish path, it would be hard for the recovery to play out beyond the short term unless we see a shift in the overall dovish tone from BOE members.
Strategy (45DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 1.21 p Short 1.215 p Short 1.265 c Long 1.27 c | 59% | +112.50 | -200 |
Short Strangle | Short 1.215 p Short 1.265 c | 67% | +450 | x |
Short Put Vertical | Long 1.21 p Short 1.215 p | 85% | +62.50 | -250 |
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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