What a long strange trip it’s been for the crisis in Greece. If you think maybe you had one of those flashes, we’ve been here before, you are right. The EU has been dealing with the problems of Greek debt since 2010. The decisions by the EU and Greece over the past five years have generally resembled kick the can; we’ll deal with that later. It’s time for payments to be made and Greece can’t do it. The EU isn’t budging (for the time being) and it looks like the eyes of the world will be on the Greek referendum vote on Sunday.
The EU has given hints of some compromise, but the Greeks will have to do so as well. The EU is looking for changes in pensions and retirement age, a lot of Greeks would rather keep the status quo, together more or less in line, just keep trucking on. Someday everything is going to be smooth like a rhapsody, but that time is way down the road for Greece. Sunday’s vote is a true dilemma for many Greeks. Stay in the EU with many concession and changes to lifestyle, or leave the EU and try and stand alone as the other one. If the thunder don’t get you, then the lightning will.
The Euro-Greece situation has continues to have a spillover effect in the markets. Monday’s action saw the Dow Jones down over 300 points at one point. The S&P 500 had one of its biggest percentage moves of the year so far. The following sessions have shown some resiliency and no one has the U.S. Blues yet. When push comes to shove, the equity index markets have taken quite a few punches and bounced back repeatedly this year.
Once in the while you get shown the light in the strangest places if you look at it right. I think the recent volatility provides a few opportunities to take advantage of in the equity index futures. I am looking to collect premium by selling an Iron Condor. I like selling the July E –Mini S&P 500 2110-2130 call spread and the 2040-2020 put spread at 10 points ($500.00) or better. Maximum risk with either spread in the money at expiration on 7/17/15 is $500 plus fees and commissions. If the market is trading between 2110 and 2040 at expiration, the options expire worthless and we keep the entire premium.
When we define risk we know exactly what our maximum loss can be. This gives us the opportunity to go to bed without as much worry about big moves in the markets. With your trading house in order, there’s nothing left to do but smile, smile, smile.
For those interested Walsh Trading is holding our weekly grain webinar Thursday July 2nd, 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.