S&P 500 Starts its Best Month of the Year on Positive Footing
S&P 500 Starts its Best Month of the Year on Positive Footing
Also, 30-year T-bond, gold, crude oil and Euro futures
S&P 500 E-mini futures (/ES): +0.16%
30-year T-bond futures (/ZB): -1.43%
Gold futures (/GC): -0.1%
Crude oil futures (/CL): +0.63%
Euro futures (/6E): +0.37%
July is usually a good month for stock: The first two weeks of the month are the best two weeks of the year dating back to 1928. The first trading day of the month is following suit, with each of the four major U.S. equity indexes in positive territory. Bonds have fallen out of bed following the first round of the French parliamentary elections, a relaxation of a safe haven bid that has likewise seen the euro produce a relief rally. Despite the stronger U.S. Dollar broadly, precious metals and energy prices remain elevated.
Symbol: Equities | Daily Change |
/ESU4 | +0.16% |
/NQU4 | +0.17% |
/RTYU4 | +0.14% |
/YMU4 | +0.1% |
S&P 500 contracts (/ESU4) were slightly higher to start the week on this morning as investors prepared for a heavy week of economic data that could influence the path of Federal Reserve interest rate cut bets. Chewy (CHWY) rose over 11% in pre-market trading after Keith Gill, aka Roaring Kitty, unveiled a 6.6% stake in the online pet food retailer, according to a filing with the Securities and Exchange Commission (SEC).
Strategy: (46DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 5275 p Short 5300 p Short 5775 c Long 5800 c | 63% | +270 | -980 |
Short Strangle | Short 5300 p Short 5775 c | 69% | +1887.50 | x |
Short Put Vertical | Long 5275 p Short 5300 p | 85% | +150 | -1100 |
Symbol: Bonds | Daily Change |
/ZTU4 | -0.13% |
/ZFU4 | -0.4% |
/ZNU4 | -0.63% |
/ZBU4 | -1.43% |
/UBU4 | -1.84% |
Bonds are down across the curve, with the 30-year T-bond futures (/ZBU4) lower by 1.43% this morning. That move retraces most of the gains made through June. Investors have several potentially high-impact events in focus this week, including this morning’s Institute for Supply Management (ISM) manufacturing survey for June. The Treasury will auction off 13- and 26-week bills today.
Strategy (53DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 111 p Short 112 p Short 122 c Long 123 c | 63% | +312.50 | -687.50 |
Short Strangle | Short 112 p Short 122 c | 70% | +1218.75 | x |
Short Put Vertical | Long 111 p Short 112 p | 83% | +187.50 | -812.50 |
Symbol: Metals | Daily Change |
/GCQ4 | -0.1% |
/SIU4 | -0.01% |
/HGU4 | +0.71% |
Gold prices (/GCQ4) are little changed this morning and remain in the trading range carved out through June, with prices near the 2,336 level. Federal Reserve Chair Jerome Powell’s speech tomorrow may help precious metals traders with a direction, but breaking out of the June range will require a clear picture for the metal. Currently, markets favor a September rate cut but there is plenty of data on tap this week, which could bring some volatility in the metal.
Strategy (57DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 2225 p Short 2250 p Short 2450 c Long 2475 c | 58% | +830 | -1670 |
Short Strangle | Short 2250 p Short 2450 c | 67% | +3180 | x |
Short Put Vertical | Long 2225 p Short 2250 p | 84% | +370 | -2130 |
Symbol: Energy | Daily Change |
/CLQ4 | +0.63% |
/HOQ4 | +1.12% |
/NGQ4 | -1.73% |
/RBQ4 | +1.31% |
An agreement from OPEC+ over the weekend is underpinning crude oil prices (/CLQ4), currently up 0.63%. Demand hopes are helping to lift prices and analysts are expecting supply deficits to hit in the third quarter of this year. The recently announced extension of production cuts from OPEC and its allies, OPEC+, is also providing a tailwind to the global market. Inventory numbers will be in focus this week along with economic data.
Strategy (45DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 74 p Short 75 p Short 89 c Long 90 c | 63% | +250 | -750 |
Short Strangle | Short 75 p Short 89 c | 71% | +1430 | x |
Short Put Vertical | Long 74 p Short 75 p | 81% | +150 | -850 |
Symbol: FX | Daily Change |
/6AU4 | -0.02% |
/6BU4 | +0.22% |
/6CU4 | -0.11% |
/6EU4 | +0.37% |
/6JU4 | -0.4% |
Euro futures (/6EU4) rallied to start the week after French elections showed a weaker-than-expected showing for Marie Le Pen’s party, although President Emmanuel Macron still lost ground. The second round of voting is on July 7 and Euro traders are also watching inflation data due tomorrow for the Eurozone.
Strategy (39DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 1.05 p Short 1.055 p Short 1.095 c Long 1.1 c | 62% | +175 | -450 |
Short Strangle | Short 1.055 p Short 1.095 c | 67% | +512.50 | x |
Short Put Vertical | Long 1.05 p Short 1.055 p | 92% | +56.25 | -568.75 |
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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