Markets present us with opportunities, but they also present us with risk. Manage your risk properly and you will be able to take advantage of more opportunities down the road.
This week saw the S&P 500 have four consecutive positive sessions for the first time since April of this year. After getting knocked down over the last two weeks during the peak of the EU-Greece concerns, the market trade over 2100 again as a deal appears to be in place in the EU. The concerns over Greek debt are not gone, but both sides seem to have come together with a plan for the near future.
The equity index markets have been knocked down many times over the first two quarters, but they have shown the strength and ability to get back up and move to previous levels again. A long term low interest rate environment, has played a big part of those recoveries. Many investors and money managers continue to hold the view that the stock market is the best place for return on investment, leading to a bit of a self fulfilling prophecy, and keeping the markets climbing higher.
There have been quite a few swings, but for the most part the has been range bound. The ranges have been extended a few times, but the S&P 500 has generally traded from near 2120 on the high end, and 2040 on the low end. I am looking for that trend to continue as we head into August.
I am trying to take advantage of a premium play, and strangle the market. I like selling the August E-Mini S&P 500 2000-2150 strangle at 20 points ($500.00) or better. There is unlimited risk in this trade, but we have breakeven levels at 20 points out from the strikes (1980 & 2170) at expiration (08/21/15). We are collecting premium on entry, and I am looking to stay in as long as possible with a target exit of points. Be sure and check margins and make sure account is suitable for this trade.
For those interested Walsh Trading is holding our weekly grain webinar Thursday July 15th, at 3 pm Central time hosted by our Senior Grain analyst Tim Hannagan. Tim has been ranked #1 by Reuters and Bloomberg in 2011 and 2012 for his most accurate end of year price predictions for soybeans and corn. Registration is free and if you cannot attend live, a recording will be sent to your email upon signup.
RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. 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. WHILE 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.
