Baseball season is here again. Lots of hitters have had long careers hitting singles. Be careful when you are swinging for the fences, because you may strike out.

KEY DATA ON FRIDAY

This week’s employment data will be watched closely by market players and observers. Observers tend to take a stoic, almost academic approach. They will often use the data to help support economic theories, or to convey a political opinion. Market players or traders tend to take a different approach, often asking how the markets will react and how can I take advantage of that move.

Jobless claims and Friday’s employment numbers may be part of the tea leaves on continued quantitative easing. If we continue to see steady job growth, those at the Fed who are on the fence in regards to QE, may speak up a bit more and the next meeting. If the numbers are worse than expected or show signs of diminished growth, supporters of QE may use the data as a reason to continue with the program.

USE A STRANGLE

Ahead of tomorrow’s numbers, I am looking to play a directional move. Using a strangle we can take advantage of a move in either direction by buying a call and a put at the same time. I like buying the April E-Mini S&P 500 1580/1520 strangle (1580 call and the 1520 put). I would look for an entry price of 10 points ($500) or better. Since we are long option premium our risk is defined to the cost of entry plus commission and fees on the trade. This is a short term trade (April options expire on 4/19) so we want to watch this closely from the start. I would look for a target exit of 10-15 points from entry. If the trade does not go our way, I would want to be out of the position a week ahead of expiration.

RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. 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. 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. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS.