Good day.
Quite slow day Wednesday as the S&P recovered from the weakness seen in Asia and opened at 1092 trading up to high of 1103. Remember we have that falling resistance from the April highs coming in that 1102 area and it was not really able to break clean above this level. Still have the gap at 1108.25 from 11th of August to be filled and the 1054.525 gap from 31st of August as well to be filled.
Seems to be more and more people calling for a move lower based seasonals that market is normally weak in September and October. However I am not so sure, I see this week's price action and the reaction around this 1100 to 1110 areas as key. Although the key upside level to break for the bulls is 1126.50, I reckon that if 1110 gives way it could be testing 1126.50 rather quickly. On the downside I see 1080 as key support and a daily close below this level opens for a move lower again and that 1037 level is of course key support level.
As for the trading, Wednesday I made 2 points on the futueres net, trading long and short, still a bit reluctant to chase it above 1100 as that key resistance zone has contained the upside well so far.
The only change I made to the options was to sell 1120 calls for October for 16.25 points and selling 1080 put for September for 8.50 points. I did close the 1050 puts for a nice profit, was kind of a roll to the 1080 puts to get a bit more premium in and leaving more gap between the 1070 to the 1040 puts in case we have a move lower. Still have most exposure to the upside above 1100 basically with calls at 1110 and 1120. Will look to make adjustments when we move out of the 1090 to 1105 range.
Have a nice day
Daily blog with thoughts and comments on the futures and forex markets through the eyes of Per-Erik Karlsson, Ceo at Avantage Financial, Switzerland.
torsdag 9. september 2010
onsdag 8. september 2010
Tuesday 7th of September
Little to report for Tuesday, generally slow day.
The S&P futures made an initial push higher overnight Tuesday, but it was never able to reach that 1108.25 level that is the gap from the 11th of August low. The gap from Thursday down at 1090.50 was closed in today, so the next downside gap is 1054.25 now from 31st of August.
Trading wise I did very little today as the market was more or less rangebound. I did took off a bit of the hedge on the long calls at 1094.25 as it looked to go lower, I figured it was less need to hedge the upside and I additionally sold 1110 calls for 17th of September.
Expect more action Wednesday.
The S&P futures made an initial push higher overnight Tuesday, but it was never able to reach that 1108.25 level that is the gap from the 11th of August low. The gap from Thursday down at 1090.50 was closed in today, so the next downside gap is 1054.25 now from 31st of August.
Trading wise I did very little today as the market was more or less rangebound. I did took off a bit of the hedge on the long calls at 1094.25 as it looked to go lower, I figured it was less need to hedge the upside and I additionally sold 1110 calls for 17th of September.
Expect more action Wednesday.
fredag 3. september 2010
Friday 3rd of September
Good evening, willl keep it short on this Friday evening as the weekend is around the corner and have an early flight to catch tomorrow morning.
First of all my predictions from earlier this week turned out to be right that S&P futures would break out of the 1037 to 1098.50 range before Tuesday next week and also that 1037 should be a bottom near term and it should go up to the top of the recent range. Both proved right and I am sitting and wondering what will happen next? I see two possible scenarios. First scenario is a total take off and break above 1126.75 and new highs for the year above 1212. Other scenario is for a reverals back into the range, with a possible false break above 1108.50 or even 1126.75 before going lower. Max pain for most traders would probably be a break above 1126.75 to take out short stops and get traders long and then reverse back lower leaving the shorts out of the move and the longs in losing positions. I like to always look at what would cause the most problems for traders and note that down for possible future reference. For the moment it looks bullish, so my best guess is for a continued upmove near term, but we have a huge resistance area from 1104 to 1108.50 that must be broken first. There has been of course a significant move higher last week and correction should be normal, but what is normal about the recent markets moves?
As for today's trading I had to make several adjustments. First I took more profit on the short puts I had outstanding, closing the remainding 1050 and 1090 short puts for a nice profit. I also had a bit too much short calls on, so need to balance the delta a bit, selling 1070 and 1080 puts. Also sold some 1100 puts for September, right after the NFP release to make the 1100 short calls (that I already had on) into a short straddle instead of an outright short call position.
I also sold 1110 calls for September expiration as it made sense to have something just above the key 1104 to 1108.50 resistance zone. I had to take off some of the 1090 short calls that, which was somewhat hedged, for a loss as the exposure around the 1090 level was a bit high. Although, I still have a few 1090 short calls for September and tiny postion with 1090 calls for October. Sold more 1120 calls for October as it make sense to be short calls with effective break even above the 1126.75 last reaction high level. The reason being that if 1126.75 breaks (key level and August high) the 1030 and 1040 short puts I have will fall in value considerably and the volatility will drop as well, making the short puts and calls portfolio profit from the drop in volatility. Last by not least I made 7.6 points on ES trading to the long side all trades except one trade.
Could certainly been more aggressive to the long side after the dip towards 1093.50, but my strategy was to trade long towards 1103 or so then to leave it for a possible failure at that 1104 to 1106 resistance, which it did initially, but should have gone long again when the reversal bars showed up after the 1093 level held. But as the saying goes: "If ifs and buts were candy and nuts, we’d all have a merry Christmas” (Don Meredith)
Wish you all a great weekend, take care.
First of all my predictions from earlier this week turned out to be right that S&P futures would break out of the 1037 to 1098.50 range before Tuesday next week and also that 1037 should be a bottom near term and it should go up to the top of the recent range. Both proved right and I am sitting and wondering what will happen next? I see two possible scenarios. First scenario is a total take off and break above 1126.75 and new highs for the year above 1212. Other scenario is for a reverals back into the range, with a possible false break above 1108.50 or even 1126.75 before going lower. Max pain for most traders would probably be a break above 1126.75 to take out short stops and get traders long and then reverse back lower leaving the shorts out of the move and the longs in losing positions. I like to always look at what would cause the most problems for traders and note that down for possible future reference. For the moment it looks bullish, so my best guess is for a continued upmove near term, but we have a huge resistance area from 1104 to 1108.50 that must be broken first. There has been of course a significant move higher last week and correction should be normal, but what is normal about the recent markets moves?
As for today's trading I had to make several adjustments. First I took more profit on the short puts I had outstanding, closing the remainding 1050 and 1090 short puts for a nice profit. I also had a bit too much short calls on, so need to balance the delta a bit, selling 1070 and 1080 puts. Also sold some 1100 puts for September, right after the NFP release to make the 1100 short calls (that I already had on) into a short straddle instead of an outright short call position.
I also sold 1110 calls for September expiration as it made sense to have something just above the key 1104 to 1108.50 resistance zone. I had to take off some of the 1090 short calls that, which was somewhat hedged, for a loss as the exposure around the 1090 level was a bit high. Although, I still have a few 1090 short calls for September and tiny postion with 1090 calls for October. Sold more 1120 calls for October as it make sense to be short calls with effective break even above the 1126.75 last reaction high level. The reason being that if 1126.75 breaks (key level and August high) the 1030 and 1040 short puts I have will fall in value considerably and the volatility will drop as well, making the short puts and calls portfolio profit from the drop in volatility. Last by not least I made 7.6 points on ES trading to the long side all trades except one trade.
Could certainly been more aggressive to the long side after the dip towards 1093.50, but my strategy was to trade long towards 1103 or so then to leave it for a possible failure at that 1104 to 1106 resistance, which it did initially, but should have gone long again when the reversal bars showed up after the 1093 level held. But as the saying goes: "If ifs and buts were candy and nuts, we’d all have a merry Christmas” (Don Meredith)
Wish you all a great weekend, take care.
torsdag 2. september 2010
Thursday 2nd of September
The final performance data shows a +7.89% on the futures program for August, which was a new record monthly gain, very nice.
Another up day in the S&P futures, closing up 8.25 points or 0.76% on the day. The price action was mostly just drifting higher with some smaller retracements. After the test lower at the open held 1079, it was basically trading to the upside for the rest of the day, with an extra push higher towards the close to barely break the 1090 level, making a high at 1090.50 on the day. Weekly claims was a bit better than expected coming out at 472k and Pending Homes Sales came out +0.4% vs. the -1.2% expected. As I mentioned a few days back I thought the after the 1037 level held for the 3rd time we should get a move towards the upper end of the 1037 to 1098.50 recent range. We are basically in the upper end of this range now. I see key resistance levels being: 1098.50 (last reaction high), 1104 (falling resistance from the 2010 high), and 1126.75 (August high). The big level for a break out higher is 1126.75.
The expectations for tomorrow's NFP report is -101K and ISM non-manufacturing PMI is 53.6.
As we saw with ISM on Wednesday, it is not only the NFP report that can move the market aggressively, so tomorrow we have 2 big event risks. I personally think the market had priced in a weak number at the start of the week, but the focus has been more for a possible better number and also the expectations for more QE at the next FED meeting fueling the drive higher.
We have once again seen decent swings over the last week. Opened the ES on Monday at 1060, down to 1037 and back up to 1090 today. Trading wise these swings forced me to make some adjustments on the portfolio. On the futures side I made 8 points on the day trading long only to hedge my short calls, which was ok, given that it closed up 8.25 points. However since I had calls from 1070, 1080, 1090 and 1100 the gain on the futures was not enough to offset the loss on the futures, so ended the day more or less flat in valuation terms. To balance the risk going into the NFP report I made several adjustements on the options. First of all I bot back the 1070 and 1080 Sep calls losing 34.50 points all inn. I bot back the short puts 1070 and 1080 for expiration tomorrow making 6 points. I also bot back the 1040 and some 1050 puts to reduce the exposure in case we sell off big, make 26 points on those puts.
Then I certainly don't want to leave some cheap puts open to make the last few points out of them. No, I rather take profit and issue new puts that is much close to the market paying a higher premium and then have more room to sell the 1050 and 1040 puts again if we go lower. It is all about having an escape route and possiblity to add more in case it moves directional and don't have to defend against positions that was almost worthless some days ago. Ok this is what I did. I sold 1120 calls for October 15th, added a very small 1040 short puts position for October 15, remember I now have 1030 and 1040 short puts for October. 1040 is the key support level, so makes sense to sell some there, of course will hedge short with futures if we get down there. I have 1.4 as much call exposure as puts at the moment. I sold 1090, 1070 put and 1060 puts for September 17th to balance the delta a bit more. The mass of the positions are now located from 1090 and to 1100. So might have to make several adjustments if we spike higher and start going up and down that range. Have above 8 points per day in premium for the September options and 3.6 per day on the October options. Delta is -12 on the positions at the moment, meaning I am slightly short in real terms. I would like to add if 1065 break tomorrow I think it will head to break 1037, however if 1098.50 breaks I favor a run towards 1130 and possibly higher near term. Big day tomorrow, good luck.
Another up day in the S&P futures, closing up 8.25 points or 0.76% on the day. The price action was mostly just drifting higher with some smaller retracements. After the test lower at the open held 1079, it was basically trading to the upside for the rest of the day, with an extra push higher towards the close to barely break the 1090 level, making a high at 1090.50 on the day. Weekly claims was a bit better than expected coming out at 472k and Pending Homes Sales came out +0.4% vs. the -1.2% expected. As I mentioned a few days back I thought the after the 1037 level held for the 3rd time we should get a move towards the upper end of the 1037 to 1098.50 recent range. We are basically in the upper end of this range now. I see key resistance levels being: 1098.50 (last reaction high), 1104 (falling resistance from the 2010 high), and 1126.75 (August high). The big level for a break out higher is 1126.75.
The expectations for tomorrow's NFP report is -101K and ISM non-manufacturing PMI is 53.6.
As we saw with ISM on Wednesday, it is not only the NFP report that can move the market aggressively, so tomorrow we have 2 big event risks. I personally think the market had priced in a weak number at the start of the week, but the focus has been more for a possible better number and also the expectations for more QE at the next FED meeting fueling the drive higher.
We have once again seen decent swings over the last week. Opened the ES on Monday at 1060, down to 1037 and back up to 1090 today. Trading wise these swings forced me to make some adjustments on the portfolio. On the futures side I made 8 points on the day trading long only to hedge my short calls, which was ok, given that it closed up 8.25 points. However since I had calls from 1070, 1080, 1090 and 1100 the gain on the futures was not enough to offset the loss on the futures, so ended the day more or less flat in valuation terms. To balance the risk going into the NFP report I made several adjustements on the options. First of all I bot back the 1070 and 1080 Sep calls losing 34.50 points all inn. I bot back the short puts 1070 and 1080 for expiration tomorrow making 6 points. I also bot back the 1040 and some 1050 puts to reduce the exposure in case we sell off big, make 26 points on those puts.
Then I certainly don't want to leave some cheap puts open to make the last few points out of them. No, I rather take profit and issue new puts that is much close to the market paying a higher premium and then have more room to sell the 1050 and 1040 puts again if we go lower. It is all about having an escape route and possiblity to add more in case it moves directional and don't have to defend against positions that was almost worthless some days ago. Ok this is what I did. I sold 1120 calls for October 15th, added a very small 1040 short puts position for October 15, remember I now have 1030 and 1040 short puts for October. 1040 is the key support level, so makes sense to sell some there, of course will hedge short with futures if we get down there. I have 1.4 as much call exposure as puts at the moment. I sold 1090, 1070 put and 1060 puts for September 17th to balance the delta a bit more. The mass of the positions are now located from 1090 and to 1100. So might have to make several adjustments if we spike higher and start going up and down that range. Have above 8 points per day in premium for the September options and 3.6 per day on the October options. Delta is -12 on the positions at the moment, meaning I am slightly short in real terms. I would like to add if 1065 break tomorrow I think it will head to break 1037, however if 1098.50 breaks I favor a run towards 1130 and possibly higher near term. Big day tomorrow, good luck.
onsdag 1. september 2010
Wednesday 1st of September
S&P futures (ES) opened up more than 11 points higher today from yesteday's close and basically had a vertical day closing up 33.75 points or 3.22% on the day. Huge run after the release of the ISM data coming in at 56.3 vs. 53.2 expected and manufacturing prices much higher than expected at 61.5 vs. 55.5. The S&P basically moved 8 points on that release, which is very large move for ISM to be. The move higher in S&P started overnight when Australian GDP and Chinese PMI came in stronger that expected. On tthe other end the US ADP report was 25k weaker than the market consencus, which indicates we will see a weak Nonfarm Payrolls number Friday. I guess the market is already pricing in a weak number and possibly QE also, maybe a major factor for the rally over the last 24 hours?
After the ES bounced off 1040 yesterday, 3rd day over the last week basically, I was looking for a move higher and left my short puts unhedged. However the 1050 straddle I had on was not doing well when the ES gapped up on the ISM release. I had not expected that strong of a move on the ISM and was forced to make several adjustements following the release. Going into the data I had 1050 straddle along with short 1065 puts, as my logic was that is 1065 resistance was taken out it would most likely move higher and leave my short puts some distance off the price and I also expected vols to come down on a move higher. That did exactely happen, however I took about a 12 points loss on those 1065 short calls on the gap, as I decided to close them down. I also closed the 1050 short call, which was part of the straddle. I took profit on the 1020 puts for September as they had gone down to 5 points in price and I don't want to try and squeeze the last points out of them. The reason that I took them off is in case ES would drop big I don't want more short exposure that is giving me only 5 more points, just not worth the risk at the moment. I also sold 1040 puts expiration September. The move higher has now turned around the exposure picture a bit for me. Yesterday I had cleary most USD worth of postions to the downside in form of short puts. Today I have most value to the upside in terms of calls. I have now from 1070 and up to 1100 short calls at every 10 points interval, for expiration September and October. Also added some short term puts just to balance the delta a bit, sold 1080 and 1070 for 3rd of September. I still have the RIG back spread on for October, which has really moved nicely in my favor last 2 sessions. I made above 10 points in the future today, trading long only. Eventhough I was able to pocket some good gains today, the valuation of the calls rose more than what I brought inn, so account value dropped on the day. But in my view we are now at a more stable level and I see less risk of a sharp down turn in this area, so I feel more comfortable sitting around here and focus my trading to the upside. I have plenty of points to play with on the outstanding calls, so it looks rather well for the remainder of the new month. Last but not least that performance of August turned out to be +7.89%, best month so far on the program, very nice. Have a great evening, speak tomorrow.
After the ES bounced off 1040 yesterday, 3rd day over the last week basically, I was looking for a move higher and left my short puts unhedged. However the 1050 straddle I had on was not doing well when the ES gapped up on the ISM release. I had not expected that strong of a move on the ISM and was forced to make several adjustements following the release. Going into the data I had 1050 straddle along with short 1065 puts, as my logic was that is 1065 resistance was taken out it would most likely move higher and leave my short puts some distance off the price and I also expected vols to come down on a move higher. That did exactely happen, however I took about a 12 points loss on those 1065 short calls on the gap, as I decided to close them down. I also closed the 1050 short call, which was part of the straddle. I took profit on the 1020 puts for September as they had gone down to 5 points in price and I don't want to try and squeeze the last points out of them. The reason that I took them off is in case ES would drop big I don't want more short exposure that is giving me only 5 more points, just not worth the risk at the moment. I also sold 1040 puts expiration September. The move higher has now turned around the exposure picture a bit for me. Yesterday I had cleary most USD worth of postions to the downside in form of short puts. Today I have most value to the upside in terms of calls. I have now from 1070 and up to 1100 short calls at every 10 points interval, for expiration September and October. Also added some short term puts just to balance the delta a bit, sold 1080 and 1070 for 3rd of September. I still have the RIG back spread on for October, which has really moved nicely in my favor last 2 sessions. I made above 10 points in the future today, trading long only. Eventhough I was able to pocket some good gains today, the valuation of the calls rose more than what I brought inn, so account value dropped on the day. But in my view we are now at a more stable level and I see less risk of a sharp down turn in this area, so I feel more comfortable sitting around here and focus my trading to the upside. I have plenty of points to play with on the outstanding calls, so it looks rather well for the remainder of the new month. Last but not least that performance of August turned out to be +7.89%, best month so far on the program, very nice. Have a great evening, speak tomorrow.
Tuesday 31st of August
The S&P futures held that 1037 level on 2 occassions yesterday and closed at 1048. It seems clear that the market does not want to break lower and I now favor a drive higher near term. Have resistance at 1065 and 1080 (0 Sigma on daily). I traded only to the short side Tuesday, protecting my short puts at 1030 and 1020 as a break lower would increase volatility and therefore I was giving up some premium to make sure I had a decent gain if price would move towards 1030. However it didn't move lower so I lost on the futures side, but that is ok as it was in the plan. I did sell another 1050 put for September when it failed to break lower since I was short the future, just to collect some more premium. I also sold 1065 calls for expiration on Friday 3rd of September, because I am thinking that if 1065 breaks the puts I have down at 1020 and 1030 will not come into play in the short term picture and the vols would probably come down a bit. Overall I now have 1050 straddle and puts at 1030 and 1020. Very small short call at 1065 for Friday and have short calls at 1070, 1080 and 1090 for September. Also have 1090 and 1100 calls for October. The most value is to the downside and I would like to see 1065 break before I look at hedging anything to the long side. Will come back with the final result for August tomorrow. Have a nice day
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