ACE - E-Mini S&P - Jan 22, 2019

Below is an illustration trading futures options on E-Mini S&P.  Our post shows bullish and bearish positions using a combination of call and put options.


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E-Mini S&P * Directional & Neutral Positions

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Commentary

  • Equity markets on the rise post holiday with highest weekly settle since Oct.

  • Positive news out of China. Opens door to closing trade gap.

  • VIX has its lowest weekly settle since October.

  • Earnings are coming up with Davos conference, ECB meeting


Volatility

It appears volatility has run down with the run up on markets with optimism.

OptV vol


Notes:

Contract Size - $50 x S&P 500 Index.

Tick Size:  Outright: 0.25 index points=$12.50

Trading Hours: CME Globex: Sunday - Friday 6:00 p.m. - 5:00 p.m. Eastern Time (ET) with  trading halt 4:15 p.m. - 4:30 p.m.

* Tip: Click here to read a helpful tip about E-Mini S&P futures and options


E-Mini S&P

Below is a weekly chart with widening of bands possibly indicating more volatility ahead if

ES Weekly

Below is a daily chart. Price broke above prior highs and although not shown, MACD has turned positive in tandem with Stochastics.  Forecast technical resistance levels based on Fibonacci retracement and expansion levels coinciding above the 20 MA at center of Bollinger Bands.

ES Daily

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Strategies

Below is an illustration of a bearish diagonal calendar to the downside if one's view were a further sell off to the downside.  The structure has positive vega to take advantage of a hike in volatility. In the ACE Program education, we cover option strikes used.

ES BEAR DFLY
 
Below is a reverse calendar spread using puts if one's view were bullish for negative vega to the upside.  
 
ES REVCAL
 
As prices move higher and implied volatility drops with optimism in the markets, there would be additional Vega on the position as modeled below.
 
ES REVCAL2

For more information in learning how to create and manage futures options positions, please reference the ACEProgram in our "Resources" section of the website.

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