Nasdaq 100, Bonds Pointing Lower as Trump Rings Opening Bell
Nasdaq 100, Bonds Pointing Lower as Trump Rings Opening Bell
Also 30-year T-bond, silver, crude oil, and euro futures
- Nasdaq 100 E-mini futures (/NQ): -0.51%
- 30-year T-bond futures (/ZB): -0.24%
- Silver futures (/SI): -1.72%
- Crude oil futures (/CL): -0.55%
- Euro futures (/6J): -0.14%
Yesterday’s push to all-time highs by the Nasdaq 100 is being met today by selling. Stocks are mostly weaker after the warmer than expected November U.S. producer price index release, while Treasuries are weaker across the curve. The push higher in yields and continued strength in the U.S. dollar has become too much for commodities to ignore, which are roundly down everywhere today.
Symbol: Equities | Daily Change |
/ESZ4 | -0.26% |
/NQZ4 | -0.51% |
/RTYZ4 | -0.49% |
/YMZ4 | -0.14% |
The Nasdaq 100’s (/NQZ4) close at all-time highs yesterday has not been met with enthusiasm. In fact, while stocks have made new highs in December, each session marked by new highs (in either /NQZ4 or the S&P 500 (/ESZ4)) has seen more stocks decline than rally. Eight consecutive days of negative breadth represents the longest streak since the December 2018 lows. President-elect Donald Trump rang the opening bell at the NYSE today.
Strategy: (50DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 20250 p Short 20750 p Short 23250 c Long 23750 c | 62% | +2075 | -7930 |
Short Strangle | Short 20750 p Short 23250 c | 67% | +5185 | x |
Short Put Vertical | Long 20250 p Short 20750 p | 82% | +1195 | -8805 |
Symbol: Bonds | Daily Change |
/ZTH5 | 0% |
/ZFH5 | +0.01% |
/ZNH5 | -0.01% |
/ZBH5 | -0.24% |
/UBH5 | -0.5% |
Treasuries have struggled in the wake of the two November inflation reports, though a very strong 10-year note auction (/ZNH5) yesterday suggests there is ample demand for longer duration debt—particularly as equity market valuations push levels unseen in many years. The data docket is clear through the end of the week. There is a 30-year bond auction (/ZBH5) later today.
Strategy (43DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 113 p Short 115 p Short 121 c Long 123 c | 60% | +625 | -1375 |
Short Strangle | Short 115 p Short 121 c | 66% | +1125 | x |
Short Put Vertical | Long 113 p Short 115 p | 82% | +343.75 | -1656.25 |
Symbol: Metals | Daily Change |
/GCG5 | -1.41% |
/SIH5 | -1.72% |
/HGH5 | -0.38% |
Ignoring dollar strength and a bump higher in Treasury yields could only go on for so long, and precious metals are giving back much of their progress this week. Silver prices (/SIH5) are leading to the downside, with losses accelerating around the U.S. open. Notably, copper prices (/HGH5) are proving more durable as traders continue to digest the latest China stimulus news.
Strategy (47DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 28.75 p Short 29.5 p Short 35 c Long 35.75 c | 61% | +1125 | -2625 |
Short Strangle | Short 29.5 p Short 35 c | 69% | +3610 | x |
Short Put Vertical | Long 28.75 p Short 29.5 p | 79% | +610 | -3140 |
Symbol: Energy | Daily Change |
/CLF5 | -0.55% |
/HOF5 | +0.06% |
/NGF5 | +0.8% |
/RBF5 | -0.38% |
Energy prices have been rather unremarkable this week, with crude oil prices (/CLF5) becoming the poster child for constrained price action: A two-month range persists, keeping black gold trading within a few dollars of 70. A push higher closer to 72 would bring /CLF5 to the midpoint of its six-month trading range, at which point directionally neutral opportunities might be warranted.
Strategy (64DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 61 p Short 62.5 p Short 78 c Long 79.5 c | 62% | +380 | -1120 |
Short Strangle | Short 62.5 p Short 78 c | 69% | +1630 | x |
Short Put Vertical | Long 61 p Short 62.5 p | 78% | +250 | -1250 |
Symbol: FX | Daily Change |
/6AZ4 | +0.32% |
/6BZ4 | -0.24% |
/6CZ4 | -0.15% |
/6EZ4 | -0.14% |
/6JZ4 | +0.34% |
The European Central Bank (ECB) cut rates by 25 basis points (bps) this morning, bucking some calls for a 50bps rate cut. But the dovish shift was underscored by the change in language in the policy statement, as the Governing Council dropped its reference to “keep[ing] policy rates sufficiently restrictive for as long as necessary.” The euro (/6EZ4) is far from the worst-performing major currency, but a growing divide between the Federal Reserve (nearing the end of its cutting cycle) and the ECB may prove to be a significant hurdle for /6EZ4 heading into 2025.
Strategy (57DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 1.01 p Short 1.025 p Short 1.08 c Long 1.095 c | 63% | +487.50 | -1387.50 |
Short Strangle | Short 1.025 p Short 1.08 c | 68% | +887.50 | x |
Short Put Vertical | Long 1.01 p Short 1.025 p | 87% | +250 | -1625 |
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
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