I don’t think many people were looking for much action from the Fed on Wednesday, but it appeared that the FOMC announcement surprised the markets just a little bit. After an initial jump up the in the S&P 500 just ahead of the release of the statement, the market dropped over twenty points after the Fed’s words hit the newswire. Rates will remain the same at least until December (the next meeting), but the language is being interpreted by some that we may see a change then.
Everyone’s favorite economic description “at a moderate pace” made a return to the latest statement. Sometimes I get the feeling that the Fed referencing the economy is like running into someone you know but haven’t seen in a while.
“How are the kids?”
“Good, growing at a moderate pace, thanks for asking.”
“Any plans for the holiday season?”
“Well, if things keep improving, and inflation can get back above two percent, we might take a little action in December”.
Given some time to reevaluate, the S&P rallied (like it always seems to do) and closed higher on the day. This continues to be the market that will not be kept down. It takes hits, and comes back out of the corner ready to fight again. The latest version isn’t taking off like a rocket, it more resembles a slow moving freight train, but always going forward.
I’m looking to make a short term play using weekly option in the E-Mini S&P 500. I like buying a November Week 1 E-Mini S&P 500 2100 Call at 8 points ($400.00) or better. This option expires next Friday (11/6/15), so we only have just over a week to make a push to 2100. I’m looking to double my money on this trade, setting an initial target exit.at 16 points. Risk is limited to the cost of entry plus fees and commissions. If the rally stalls and it doesn’t look like 2100 is in sight, I would look to limit my loss to 5 points.
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.
