The Fed was on the buy side again today; they purchased $7.248 billion of the $17.913 offered by dealers in the 2013 to 2016 range. Also helping the early morning market bid, the payroll firm ADP announced that it is predicts that the U.S. economy lost about 371,000 jobs last month. This was a little less than expected and seemed to have put traders on their toes going into Friday's numbers. Nonetheless, the buying frenzy eventually dried up leaving Treasuries well into negative territory by afternoon trade.
Unlike the ISM manufacturing data released earlier in the week, the ISM services index was a slight disappointment. In fact, the report suggests that the service sector contracted more last month than it did in the previous.
At first, the market seemed to shrug off the Treasury Department's announcement that it would be auctioning $75 billion in notes and bonds next week. Perhaps the success of last week's 7-year note issue is still fresh in the minds of traders. However, as the day progressed the market made its way considerably lower.
Treasuries have been overly choppy, but the large up and down days haven't given way to a clear direction. This makes for a difficult trading environment but Friday's employment data may be what we need to get the market back on course. For now, we prefer to wait until the employment situation is known before trying to speculate on the next move.
Going into Friday's numbers, we like the idea of being bullish near 114 in the 30-year bond and just under 115 in the note. At which point it may be an opportunity to execute long futures, short puts or a combination. Aggressive option spread traders may look to buy a call near the money call, sell an out-of-the-money put and then sell an out-of-the-money call. The result is a fast paced option spread that is versatile in terms of adjustments.
We mentioned that we liked the upside in the 5-year note below 114 and the market looks to have moved higher without us. However, there may be an opportunity to be bullish this market after the employment data Friday morning. Stay tuned for better price action.
* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.
**Seasonality is already be factored into current prices, any references to such does not indicate future market action.
Treasury Bond and Note Option Trading Recommendations
**There is unlimited risk in naked option selling.
Flat
Treasury Bond and Note Futures Trading Recommendations
**There is unlimited risk in trading futures.
Flat
Eurodollar Futures Trading Recommendations
**There is unlimited risk in trading futures.
June 29 - Our clients were recommended to sell September Eurodollar futures while buying a 9937.5 call as insurance. The calls were getting filled near 7 ticks, and the futures near 9933. This makes the total risk on the trade at expiration $287.50 before commissions and fees.
Unlike the ISM manufacturing data released earlier in the week, the ISM services index was a slight disappointment. In fact, the report suggests that the service sector contracted more last month than it did in the previous.
At first, the market seemed to shrug off the Treasury Department's announcement that it would be auctioning $75 billion in notes and bonds next week. Perhaps the success of last week's 7-year note issue is still fresh in the minds of traders. However, as the day progressed the market made its way considerably lower.
Treasuries have been overly choppy, but the large up and down days haven't given way to a clear direction. This makes for a difficult trading environment but Friday's employment data may be what we need to get the market back on course. For now, we prefer to wait until the employment situation is known before trying to speculate on the next move.
Going into Friday's numbers, we like the idea of being bullish near 114 in the 30-year bond and just under 115 in the note. At which point it may be an opportunity to execute long futures, short puts or a combination. Aggressive option spread traders may look to buy a call near the money call, sell an out-of-the-money put and then sell an out-of-the-money call. The result is a fast paced option spread that is versatile in terms of adjustments.
We mentioned that we liked the upside in the 5-year note below 114 and the market looks to have moved higher without us. However, there may be an opportunity to be bullish this market after the employment data Friday morning. Stay tuned for better price action.
* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.
**Seasonality is already be factored into current prices, any references to such does not indicate future market action.
Treasury Bond and Note Option Trading Recommendations
**There is unlimited risk in naked option selling.
Flat
Treasury Bond and Note Futures Trading Recommendations
**There is unlimited risk in trading futures.
Flat
Eurodollar Futures Trading Recommendations
**There is unlimited risk in trading futures.
June 29 - Our clients were recommended to sell September Eurodollar futures while buying a 9937.5 call as insurance. The calls were getting filled near 7 ticks, and the futures near 9933. This makes the total risk on the trade at expiration $287.50 before commissions and fees.
