Both the Senate and House of Representatives voted to raise the debt limit and reopen the government late Wednesday night. The bill will keep the government running until January 15, keeping “sequester level” spending. The bill will also raise the borrowing limit until February 7, avoiding a limit that would have been reached Thursday October 17, 2013.

Although this is only a temporary fix, I do believe it is good for the government to be up and running again. Look for the terms “debt ceiling,” and “sequester” to trend higher in use by the media. On a personal note, I still miss Fiscal Cliff. Many markets were in a bit of a funk during the shutdown. Grain markets rely heavily on data provided by the USDA. Private surveys and reports helped give traders an idea of what is going on, but those reports aren’t “official.”

The equity markets seem to have been reacting to every rumor or bit “leaked” information. We have seen strong rallies pushing near contract highs, and volatile sell offs putting in quarterly lows. Some of these moves haven’t made much sense to me. These markets have been tough to trade for the risk adverse.

BULL CALL SPREAD

I have a feeling that investors and traders want to see the market continue with what it has been doing most of the year, climbing higher. The equity index markets have been giving investors returns that are hard to find elsewhere. I am joining in with this trend with a bull call spread.

I like buying the December E-Mini S&P 500 1750-1800 call spread at 12 points ($600.00) or better. The trade is long premium so risk is limited to the cost of entry plus fees and commissions. I don’t think we are going to see the S&P touch 1800 by expiration (12/19), but I think this market can continue to run higher. We are looking to take advantage of a possible move further to the upside, and an increase in value of the spread.

  • I am setting an initial target exit at 25 points, scaling out at every five points for multiple positions.
  • If this market decides to sell off and he trade is not going our way, I would to exit for a five-point loss from entry.

FOCUS ON WHAT YOU CAN CONTROL

When it comes to trading there are a lot of factors that are beyond our control.  The government shutdown kept valuable data from reaching our hands. Sometimes electronic trading doesn’t run as smoothly as advertised. Focus on the things you can control, your trading plan and your risk parameters.

Contact Weyer via e-mail here.

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.