Yesterday’s U.S. Federal Reserve FOMC minutes revealed that a few members are willing to scale back the current asset purchase program as soon as next month. Those on the other side of the coin were able to successfully plead that the economic recovery started out strong, but is beginning to slow down.

As we know from the last FOMC meeting, the asset purchase program will continue for now. Another interesting concern from some committee members is that financial markets are becoming “too buoyant.”

KEY POINTS

While there may be a few committee members concerned about current Fed policy, Chairmen Bernanke is not one of them. His testimony earlier in the day showed that his concern is ending the policy too early. “Significant benefits” was the description he used to describe the current policy’s effect on economic recovery. Chairmen Bernanke did say that “tapering is a possibility, but only that” in response to questions from the Joint Economic Committee of Congress. In Fed speak, that could be interpreted as we will maintain current policy until we decide not to.

TRADE IDEA

I am looking at a play based on a market dip, or short term reversal. I like buying the June E-Mini S&P 500 1600-1550 put spread at seven points ($350.00) or better. Since we are long option premium our risk is limited to the cost of entry plus fees and commissions. We only have about a month until expiration, so I am looking to exit in two to three weeks. I am setting target exits at the 15-20 point range on the spread. If we don’t see a dip in the S&P, look to exit if the spread loses half the cost of entry. We are looking to take advantage of any weakness in the latest bull run.

Tomorrow is the last day before a long weekend and the start of an early summer for many. Enjoy a day away from the markets on Monday, but please take some time to think about those who gave the ultimate sacrifice on Memorial Day.

RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES. A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.