The S&P has been a bit range bound over the last few weeks, trading a channel from 2030 to the 2090 level. Since April 1st we have seen the market do lot of back and forth trading. Over that time the index has not traded in the same direction for more than three consecutive sessions. It appears to be in a bit of a comfort zone.

Trying to trade futures in these conditions can be a challenge. If you are a scalper in out of a market several times a day, you have probably found some opportunities. But if you are looking to be a longer term trend follower, it has been tough.  The see-saw market can be frustrating and chop you up. Markets like these have me in search of opportunities on the options side.

I am looking for the E-Mini S&P to continue trading the latest channel over the next week. Using a strangle I am looking to take advantage of the market trading between the 2030 and 2090 area. I like selling the May E-Mini S&P 500 2030-2090 (selling the 2030 put and the 2090 call) strangle at 10 points ($500.00) or better. The May options expire on Friday May 20th, so we have just over a week to be in the trade.  If the market looks like it wants to trade through either of the strike prices, I would look to limit a loss to 4 points. Check the margin requirements to see if this trade is suitable for your account.

For those interested Walsh Trading is holding our weekly grain webinar Thursday May 12th at 3:00 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.

John Weyer

Director of Commercial Hedging

Walsh Trading Inc.,

jweyer@walshtrading.com

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.