Just when you burned off the extra calories from overdoing it on Thanksgiving, there is something else on your plate. This Friday brings us the Employment Situation in the United States, and observers will be guessing how the Fed may interpret the numbers.
Many feel that a strong non –farm payroll number is a guarantee for a rate hike in December. I still think there is some debate, no matter what the data shows on Friday. A higher unemployment number or lower non-farm doesn’t necessarily mean the Fed won’t take action. For all we know the Fed may have already made a decision and just need to date the press release.
Report days are always tough to trade. Markets can swing in big fashion in a number of seconds. Often it is not for the light of heart. If you are looking to play Friday’s numbers I like defining risk, usually by buying options. This week I like buying the December E-Mini S&P 500 Week 1 2060/2100 Strangle at 10 points ($500.00) or better. The options expire on Friday 12/5/15 at 3:00 pm Central time, so this is a very short term trade. I am setting an initial target exit at 25 points, and would like to keep a loss close to 5 points. If you do not exit the position and either strike is in the money, you will be exercised a December E-mini S&P 500 futures position, so make sure you have the margin to cover it.
For those interested Walsh Trading is holding our weekly grain webinar Thursday December 3rd, 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.
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.
