Get started

Straddle

Straddle Trade ahead of US reportsToday I've decided to try a different strategy: a straddle trade. I've created 2 limit orders from the highs and lows of the 24 hour period. For each order, I set the stop loss for 20 pips, and the TP for the next pivot point line (S1 and R1). The idea is that, no matter the results from the reports from the US treasury, we can capitalize from the trade here. The orders should expire today, so if the market doesn't move as anticipated we can simply back out of the deal before the weekend.
by NaCl1252
TLT Long Treasury ETF- an options straddle idea TLT is here on a 15-minute chart. Price action is orderly and somewhat related to treasury yield fluctuations and the value of the existing securities adjusting from those fluctuations. There is adequate volatility. A straddle options strategy can be employed. Positions can be taken in both directions. Depending on price action, one leg will rise and the other will fall. Overall the trades make profit so long as there is volatility in one direction or the other. Additionally, if the instrument is oversold and upward price action is more likely, the proportions between the two legs can be skewed toward calls and vice-versa in overbought /overvalued scenarios. Here in TLT, price is near to support and so relatively oversold. The hypothetical setup is tipped in favor of the probabilities and expectations for a rise in TLT. Options can be OTM or ITM depending on trader preference. In this example the calls selected are OTM at the level of a Fibonacci retracement of the prior trend down and the puts selected are slight OTM at the horizontal support level and the trade is skewed 70/30 ( by AMEX:USD ) toward the calls. For a more astute explanation see the webpage from the link
NASDAQ:TLT
by AwesomeAvani
Will EUR-USD Parity Repeat?Two men adventuring in the wild. They see a tiger racing towards them. They turn and start dashing away. Then, one of them stops to put on shoes. “What are you doing? The beast will outsprint you despite those” says the other. “I don’t have to run faster than the tiger” he retorts. “I just have to outrun you.” FX stories are not dissimilar. Relative strengths and weaknesses facilitate price discovery between currency pairs. On 1 January 2002, twelve EU countries move to euro in a historic event. Since December 2002, the euro has always traded above parity to the US dollar. The only exception is the last quarter of 2022. EUR/USD has been above parity since late 2002 except for Q4 2022 Despite the collapse of regional banks, US corporations and consumers are in the pink of health. Cracks are starting to show in certain pockets but none too alarming (just yet). In contrast, economic conditions in Europe are in sharp deterioration. Arguments abound on the direction of the euro ahead. Following the rate decisions by the ECB and the US Fed last week, volatility in the Euro/USD pair has been trending to near 12-month lows. Low volatility equates to lower premiums on options. Periods of low volatility are opportune time for buying options. This paper posits that euro will carry greater risk to the downside. That said, geopolitics and economics could turn favourably to the euro resulting in a rally. To seize opportunities presented by the price action, this paper posits a long straddle to benefit from low volatility & a euro that is set to move. EURO SKEPTICS OBSERVE MANY PROBLEMS Talk of the euro falling back to parity is once again creeping into the market murmurs. Google search on euro parity is at levels last seen in Nov 2022. As reported by Bloomberg, last month, Nomura, Rabobank & ING analysts forecast the euro to get to levels marginally shy of parity to the USD. The likelihood of the euro hitting parity by early next year have more than doubled, as per Bloomberg options model. Strong US economic fundamentals, rising US yields are bolstering the dollar. Rate differentials between the two tilts in dollar’s favour. US Q3 Real GDP was up by an annual rate of 4.9%, more than double the growth rate for Q2. Additional tailwinds for greenback include sluggish Eurozone economic growth, concerns linked to Italy’s government debt, and slowdown in destination markets for Eurozone's exports. OTHER ANALYSTS BELIEVE THAT EUROZONE PESSIMISM IS ALREADY PRICED IN Disagreeing with euro sceptics are analysts with a view that Eurozone pessimism has been baked in. Eurozone GDP fell by 0.1% in Q3. Despite feeble GDP data, market reaction was stoic. That points to an "invisible" floor for the euro. Lack of growth is priced in. FOUR CHARTS CONTRASTING US EXCEPTIONALISM WITH GROWING EUROPEAN WEAKNESS US GDP continues to expand at a remarkable clip given the size of the economy. In sharp contrast, Eurozone GDP growth is fragile and steadily losing steam. US GDP racing ahead with Eurozone GDP losing steam US inflation, while softening, is showing signs of spiralling up, thanks to its resilient and tight labour market. This puts the Fed on a hawkish stance supporting USD. Inflation still above central bank targets but US inflation raging higher than in Eurozone Meanwhile, the ECB might have headroom to ease rates thanks to slowing inflation and might be forced to loosen up to support growth and to stem economic contraction as shown below. Composite PMI in US in expansion territory compared to sharp contraction in Eurozone Monetary policy divergence between the Fed and the ECB has prevailed since early last year when the Fed was quicker relative to ECB to crank up rates. Interest Rate Policy Divergence in US has continued to remain in favour of the dollar In summary, the USD is poised to strengthen against the Euro, given strong GDP, higher US inflationary environment, sharp contraction in Eurozone, and continued monetary policy divergence. TECHNICALS ALIGN WITH FUNDAMENTALS POINTING TO WEAKENING EURO Momentum based indicators signal further weakness in the euro while oscillators point to strengthening based on near term mean reversion. Overall, across twenty-five indicators curated by TradingView, eleven signal weakening, ten neutral, and four point to strengthening. TradingView’s Technical Signals Dashboard point to euro weakness CFTCs Commitment of Traders (CoT) report show that leveraged funds are net short. Asset managers who are still net long are gradually reducing their long positions. In contrast to fundamentals, technical, and CoT reports, options market data points show that traders are bullish for euro to strengthen. Put-call ratio at 0.76 shows larger open interest on calls compared to puts. That said, over the last one trading week, options traders are increasing puts compared to calls suggesting shifting market sentiments leaning towards a weakening euro. Implied volatility based on options market is near 12-month lows with the conclusion of central bank meetings across both sides of the Atlantic. Low implied volatility makes premiums affordable. CVol Index is at near 12-month low (Source: CME QuikStrike) HYPOTHETICAL TRADE SET UP Affordable premiums offer the best opportunity for buying options. When ambivalence prevails on the path ahead for the euro, traders could consider a long straddle to leverage volatility expansion and price action. This paper posits a long straddle at a strike of 1.0845 on CME EUR/USD options expiring on 5th April 2024. A long straddle comprises of two legs: (a) long position in a call, and(b) long position in a put, at the same strike and expiry. Each CME EUR/USD Monthly options contract delivers an exposure to 125,000 euros. Take the settlement prices as of November 3rd as an example, premiums for the (a) long call at 0.0182, and (b) long put at 0.0187, aggregate to 0.0369 for the long straddle. This translates into USD 4,613 in straddle premiums. The straddle has two break-even points (BEP) at expiry. BEP on the downside is at 1.0476. BEP on the upside is at 1.1214. The pay-off from the straddle is illustrated in the chart and table below. Pay-off at Expiry from Long Straddle (Source: Mint Finance Analysis) MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
CME:6E1!
by mintdotfinance
Oil, where are you headed? This week our eyes fall on the crude oil market. From our previous article, Cracking the Crack Spread , we know that crude oil and gasoline hold a special relationship. Since gasoline is extracted from crude oil, the spread between the two futures should not diverge too much. Yet, in the past few weeks, we have observed a deviation in their prices with the Crude Oil/Gasoline ratio peaking. Futures Fundamentals Open interest refers to the number of open contracts in the market. It serves as a measure of liquidity, activity and more importantly, interest in the security. While trading volume refers to the number of contracts traded each day. The decline in both prices and open interests indicates the liquidation of long positions. Together with a low trading volume, this can indicate a bear market. Economic Outlook Although the federal reserve (Fed) is likely done with its hikes in this hiking cycle, it intends to keep interest rates higher for longer. Coupled with continued tightness in the labor market, sticky inflation and inflating cost of debt, growth would be dampened. One way to back up this view is to look at the US Purchasing Managers’ Index (PMI). The PMI is widely used as a leading indicator to anticipate changing economic trends. Furthermore, there tends to be a positive association with PMI and commodities year-on-year change. Given the latest PMI value, it points to a negative economic outlook, with year-on-year crude oil prices playing catch up. It is good to be mindful that if the Fed has indeed concluded its hiking cycle, there is a greater likelihood for the dollar to weaken rather than strengthen. As crude oil is quoted in USD, a weaker dollar would lead to a more expensive contract. Therefore, there are upside risks to crude oil prices. Supply Factors US crude oil production reaches record high levels. In conjunction with other non-OPEC countries’ record production, they have been upholding the supply despite facing cuts from OPEC. This could possibly explain why oil prices fell on Oct 4th when OPEC confirmed its cuts until the end of the year. However, we also see the number of oil rigs in the US on a decline, which may hinder any higher levels of production. Also, there is the debate whether production from non-OPEC countries will be outpaced by OPEC’s cut, leading to the materialization of a supply deficit. Volatility Historically, the energy sector is known for its volatility. In comparison to the S&P 500, crude oil appears to be more volatile. In the chart above we look at the maximum year-on-year change in the S&P500 and marked that range on the year-on-year crude oil prices. Here, the wider range that crude oil trades becomes much more obvious compared to the S&P 500. This effect could likely stem from the fact that oil, unlike equities, is affected by a myriad of complex factors at any given time, from supply/demand to geopolitical, environmental and many more. Gold and crude oil tend to be positively associated. Rising oil prices place upward pressure on inflation leading to precious metals to appreciate as investors flock to “store of value” assets. Other than store of value, gold also acts as a form of safe haven asset, where investors take shelter in gold against uncertainty. With gold now trading significantly higher than oil, it appears that markets are expecting higher levels of fear and uncertainty, which could translate to higher volatility in oil. So where is oil heading? Here we find ourselves in a limbo, considering potential breakout risk from geopolitical tensions the downside risk from the likely turnover of the economy, a fading PMI pointing to oil weakness, and overextended oil prices when looking at the spread complex with gasoline. In times like this, when risk could extend on either side, a long straddle options position could allow us to harness profits in the event of a volatile move, in either direction. To express our view, we can set up long straddle position by buying one at-the-money call and put option that expire in Feb 2024. Given the last price of CLZ3 is 82, we will purchase the two options at the strike price of 81.50. The premiums for the call and put options are 5.39 and 4.89 points respectively. In total, our premium would be 10.28 points. As a rough gauge of the potential for profitability, it might help to look at the volatility in oil prices. For the selected strike, ignoring the effects of options Greeks, the price on expiration would have to move roughly 12.7% in either direction. In the chart above, the bottom figure shows the rolling 3-month change in oil prices, with the red band marking the 12.7% higher & lower range. Here we see oil continually swinging past this level, highlighting the potential for this strategy to play out. In this setup, it should also be noted that the maximum loss on the position is the premium paid on the initial setup, which is 10.43 points. The breakeven levels are above 92 or below 71 on option expiration day, as seen in the chart above. Each 0.01 point move in crude oil options is for 10 USD. CME also has a handy strategy simulator allowing you to construct the option strategy and simulate future prices on your position's P&L. Above are two potential scenarios if the price of crude oil remains close to flat on expiration day, or if it trades lower on expiration day, alongside a diagram showing the effect on the option position's P&L. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description. Reference: www.cmegroup.com www.cmegroup.com www.cmegroup.com
NYMEX:CL1!
by inspirante
Navigating Rocky Oct After a Crushing Sept in US EquitiesSeasonality is pervasive in financial markets. Some are benign while others are not. The “September Effect” refers to a month when equity returns gets crushed. Typically, this is followed by a volatile October. Other well-established pattern in equity markets is the "Santa Claus Rally" which is known to occur during December. Equities go bullish with increased optimism, holiday spending, and portfolio rebalancing before the end of the year. Then, there is also the "January Effect" where small-caps tend to outperform large-caps in the early part of the year. Essential to remember that historical trends do not guarantee future performance. This paper delves into the September Effect followed by the volatility which tends to be witnessed during the month of October. Portfolio managers can prudently position their portfolios to gain from rising volatility and sharp price moves in October and the rest of the final quarter. WHAT EXPLAINS POOR EQUITY RETURNS IN SEPTEMBER? There is no exact rationale explaining why September is historically the worst month of the year for equities. Over the last 94 years, September is the only individual month that has declined at least 50% of the time. Scott Bauer, CEO of Prosper Trading Academy surmises in an opinion note that three drivers plausibly explains this: 1. Post Summer Vacation: In the lead up to summer in Europe, average trading volumes grind lower resulting in lower volatility from June to August. When portfolio managers and investors return in September, their collective rebalancing of portfolios cause panicked exits as they create space for new holdings. This mass-exodus of selling shares pushes prices lower making September the worst month for stocks. 2. Year-end for Mutual Funds: Many mutual funds close their fiscal year in September. These funds purge their portfolios during this ill-fated month. 3. New Bond Issuances: Like equity trading activity, bond issuances ease during summer and return with vengeance and spikes in September. New issuances channel existing money into bonds forcing investors to rotate out of equities and into bonds. SEPTEMBER US EQUITY MARKET PERFORMANCE IN THIS MILLENNIUM Does the September effect prevail in the current millennium? Since start of 2000, September indeed is the worst month for S&P 500 stocks with average returns of -1.8%. Surprisingly, the months with the highest occurrence of negative returns is not September but January. Over the last 23 years, January had 13 months of negative returns. June along with September rank second with 12 occurrences of negative returns during the same period. The chart below summarises average monthly returns of S&P 500 index. Clearly, on average, September stands out as a poor performer while April is the best . Interestingly, the S&P 500 shares tend to deliver positive returns with average upside performance of 3.22% in the fourth and final quarter of the year. Likewise for Nasdaq 100, the September Effect is even more pronounced with index plunging 2.61% on average. Unlike S&P 500, February (14 of 23) has the highest number of months with occurrence of negative returns. The month with the second highest occurrences of negative returns are September, June, and December with 12 of 23 years marking a negative return. The chart below summarises average monthly returns on the Nasdaq 100 index. While September crushes Nasdaq stocks, October is the best month thus far this millennium. October and November deliver positive returns with a pullback in December. On average, Nasdaq 100 upside performance stands at +2.44% in the fourth quarter. A CRUSHING SEPTEMBER IS FOLLOWED BY A ROCKY OCTOBER While September is the king of worst month for stock returns, October claims the crown for being the most volatile. Over the last 23 years, the S&P 500 equity returns show the largest exaggeration in October. Range as used below is defined as the high minus the low of the month and then expressed as a percentage as month’s opening level. Analysis shows that equity returns move by 9.1% in October compared to 6.9% on average for the rest of the months in the year. Similarly, observations in Nasdaq-100 also point to exaggerated range of returns during the month of October. Range in Nasdaq monthly returns stand at 11% in October compared to 9.2% on average for the rest of the months in the year. Based on expected returns and volatility, investors in S&P 500 can expect large swings in returns in October as evident from the chart below. Likewise, Nasdaq 100 investors can expect large swings in October returns based on observations over the last 23 years. OUTLOOK FOR FINAL QUARTER OF 2023 Twenty-three years of historical observations point to a positive upward bias in equity returns for the last three months of the year. This time however, the outlook going into the final quarter is beset with head winds. Not one but five of them approaching in parallel. Risk lurks in many places. Strong dollar. Oil skirting near $100/barrel. Resumption of student loan repayments. Record high mortgage rates driven by higher for longer policy stance. Automotive workers striking at multiple plants potentially leading to higher labour costs and automotive inflation. Dollar is trading at 10-month highs. The US 30-year mortgage rates at record high levels unseen in 23-years. The 10-year US yield are at levels last observed during 2007. Gathering of these dark clouds are starting to show up in the University of Michigan’s US Consumer Confidence index. Since June, American exceptionalism boosted the index to 71.73 clocking a 52-week high. However, with a raft of concerns weighing on the consumers, the index has started to drop the last two months. HARVESTING VOLATILITY EXPANSION USING CME MICRO OPTIONS ON S&P 500 AND NASDAQ 100 INDEX In times of uncertainty, where seasonality leans towards a bullish rally but fundamentals signal a bearish grind, portfolio managers can position to gain from volatility expansion and sharp index moves in either direction. Options can be used to engineer a convex portfolio. Convexity in finance refers to portfolio strategies which enjoy outsized and solid gains while limiting downside risks. Convex strategies deliver non-linear returns with substantially higher gain for every unit of pain. LONG STRADDLE USING OPTIONS ON CME MICRO E-MINI S&P 500 FUTURES Long straddles involve holding a simultaneous long call and long put position at the same strike price for the same expiration period. Let’s look at a hypothetic long straddle using Micro E-Mini S&P 500 Options expiring on 29th December 2023 at a strike price of 4400. The straddle pay-off is visualised in the chart below. This trade will generate positive returns when (a) index rises above 4655, or (b) index falls below 4145, or (c) volatility expands . The premium required for this trade (as of 2nd October 2023): (Premium for Call Option + Premium for Put Option) = (USD 631.7 + USD 636.65) = USD 1268.35. If index rises 10% to 4840: Call option would pay out ~USD 1568 = ((4840 – 4400) x 5 – Premium for Call Option) = (440 x 5 – 126.34) while the put option would expire worthless, so, net profit would be: (Net PnL from Call leg – Net PnL from Put Leg) = (1568 – 636.65) = ~USD 932 By the same measure, the long straddle will suffer losses if the index remains flat or its moves are muted. It also loses money if volatility remains flat or contracts. If index remains at 4400: Both options would expire worthless, so, the position would lead to a net loss of the premium paid = Loss of USD 1268.35. LONG STRADDLE USING OPTIONS ON MICRO E-MINI NASDAQ 100 FUTURES Let’s look at another hypothetic long straddle using Micro E-Mini Nasdaq 100 options expiring on 29th December 2023 at a strike price of 15250. The straddle pay-off is visualised in the chart below. This trade will generate positive returns when (a) index rises above 16416, or (b) index falls below 14084, or (c) volatility expands. The long straddle will endure losses if the index remains flat or its moves within a narrow range. It will also lose if volatility remains flat or shrinks. MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
Editors' picks
CME_MINI:MES1!
by mintdotfinance
12
Timing Triumph:Unraveling the Art of the Straddle Forex StrategyIntroduction In the dynamic realm of forex trading, where market movements can be as unpredictable as they are enticing, traders often seek innovative strategies to capitalize on volatility. One such strategy that has garnered attention for its ability to thrive in uncertain market conditions is the Straddle Forex Strategy. This article delves into the intricacies of the Straddle Strategy, exploring its core principles, execution, benefits, and potential drawbacks. So...Sit back, relax, and enjoy this enlightening article about the incredible Straddle Strategy. Remember to show your support by hitting the LIKE button and subscribing! Your journey into the world of the FOREXN1 Strategy is about to begin. The Essence of the Straddle Strategy The Straddle Forex Strategy is a versatile approach designed to exploit significant price movements, regardless of their direction, during times of heightened market uncertainty. It operates on the foundation that major news releases, economic data announcements, or geopolitical events can trigger substantial market fluctuations. The strategy aims to capture the potential gains from these abrupt price swings by simultaneously opening two opposing positions: a long (buy) position and a short (sell) position on the same currency pair. Execution of the Straddle Strategy Preparation: Traders must identify upcoming high-impact events or news releases that are likely to cause substantial market volatility. These events could include central bank interest rate decisions, employment reports, GDP releases, or geopolitical developments. Positioning: Just before the event, the trader places both a buy and a sell pending order above and below the current market price, effectively creating a "straddle." These orders are executed if the price moves significantly in either direction due to the news event. Activation: Once the market reacts to the news and triggers one of the pending orders, the corresponding position is opened, while the other order is canceled. This ensures that the trader is positioned to profit from the price movement in either direction. Risk Management: To safeguard against potential losses, traders often implement stop-loss and take-profit orders for both positions. The stop-loss limits potential losses, while the take-profit locks in gains if the price moves significantly. Here is an example of an advanced straddle strategy with a real-life illustration.Remember that you can customize and modify this idea and approach of your strategy, such as determining where to place pending orders, setting take profits, and establishing stop-loss levels based on your discretionary judgment or the results of your backtesting. Suppose we are nearing the announcement of a significant "Red Flag" news item concerning the US Dollar, specifically the Unemployment Claims report. This news is expected to exert a strong influence on the EUR/USD currency pair, resulting in pronounced volatility due to its nature of reflecting the count of individuals who have applied for initial unemployment benefits in the previous week. Given that such data releases strongly affect currency pairs involving the US Dollar, the EUR/USD pair is likely to experience heightened volatility, thus magnifying the significance of this news release due to its anticipated impact. One of the most effective approaches to employing the Straddle Strategy prior to a news release is by placing two pending orders in both directions of the market. This entails setting a buy stop order and a sell stop order, both positioned a few pips above a price structure. In the ideal scenario, these orders would be strategically placed just above and below key support and resistance levels. Once we have determined the optimal placement for the pending orders, it is equally crucial to establish both the stop loss and take profit levels. While leaving the take profit open to allow the news to drive the price movement is a viable option, setting a stop loss is essential for risk management, not only within the context of this strategy but also as a fundamental practice across various market tools, helping to mitigate potential significant losses. In this scenario, the news had a negative impact on the USD Dollar and subsequently positively influenced the EUR, resulting in a robust upward surge that breaches the resistance level. This development triggers the activation of the pending BUY STOP order, leading to a rapid attainment of our take profit target. Before delving further into the details of this remarkable Forex strategy, it's important to grasp certain key points: 1 ) FOREX is never as easy and straightforward as it might appear in books and articles, including ours. It's a complex endeavor that demands careful consideration. 2 ) Every strategy must undergo extensive testing in a demo account to ascertain its compatibility with our individual personality, available time, money management approach, and other relevant factors. 3 ) Backtesting is unequivocally the most accurate means of developing a suitable strategy for future use. The Straddle Strategy is undeniably intriguing and holds the potential to be an excellent approach under specific circumstances. However, it's imperative that you tailor it to your unique requirements and preferences. Benefits of the Straddle Strategy Volatility Advantage: The Straddle Strategy thrives in volatile markets, allowing traders to benefit from significant price movements resulting from news releases or unexpected events. Directional Neutrality: Unlike traditional trading approaches that require predicting price direction, the Straddle Strategy focuses on capturing market movement without bias, making it particularly appealing in uncertain times. Potential for Large Gains: When executed correctly, the strategy can lead to substantial profits in a short period, especially during high-impact news events. Drawbacks and Considerations Cost of Implementation: Straddle trades often require tighter spreads and lower trading costs due to the need for frequent entry and exit points. High transaction costs can eat into potential profits. False Breakouts: In some cases, market reactions to news events might be short-lived, leading to false breakouts that trigger positions but result in limited price movement. Timing and Liquidity: Precise timing is crucial in executing the Straddle Strategy. Entering the market too early or too late could lead to missed opportunities or unfavorable price movements. Additionally, liquidity fluctuations during news releases can affect order execution. Conclusion The Straddle Forex Strategy stands as a powerful tool in a trader's arsenal, providing a way to harness the potential of volatile markets without the need to predict price direction. By capitalizing on significant price movements triggered by high-impact news events, traders can aim to secure profits irrespective of market turbulence. However, like any trading approach, the Straddle Strategy requires a thorough understanding of market dynamics, meticulous planning, and effective risk management to maximize its benefits and minimize potential drawbacks. As with any trading strategy, it is essential for traders to practice on demo accounts and gain hands-on experience before implementing the Straddle Strategy in live trading scenarios.
Education
by FOREXN1
11
How to Straddle an Ascending TriangleFor info on Ascending Triangle, check out my previous AMZN chart. XLE consolidated 2 weeks prior to form an Ascending Triangle on the 4hr chart. The 2 week period at the end of July XLE gained 20% . This sets up a Great risk/reward around a sector with NG on the move. Don’t count out the oil bull either. While markets were bearish overall, XLE was on a 60% top before June. Falling Energy gave way to lower inflation prints in June and July. I can see XLE going to June high of 93 to form a cup and handle. More on that in my next XLE idea.
AMEX:XLELong
by SPYvsGME
3
22/08/2022 - $SPY Call SetupVery clear falling wedge (lower highs, lower lows.) What's interesting about this setup is we are nearing a gap fill from August 11th, the highlighted green zone. At the top of this zone is a blue dashed line. This happens to not only be a likely support from Aug 12, but is also a possible support on a 50% retracement. My trade, depending on how Monday opens, is to look for calls on the Wedge's support line and in the purple zone given high volume; the expectation is the the price will break up out of the walling wedge. If we fly through the green gap-zone, ill be looking at the lime-green dashed line, which is also a support from August 11th lows. My planned exits are the red dashed lines, which coincide with supply zones and Fibonacci lines (0.618, 0.5, 0.382).
AMEX:SPYLong
by monas
$TLT - Bond volatility low and ripeNow that Fed chiefs are selling their stocks near all time highs they can now start tapering quantitative easing and we could see bond market volatility pick up from current depressed levels.. 20 Year Treasury Bond ETF $TLT has a 52wk IVR of 3.47% and another way to insulate your long term portfolio from more volatility is to buy a straddle on bond volatility.. we’re looking at the NOV’19 ATM $148 straddle for a debit of $6.63.. and close for 50% profit or loss of premium, whichever comes first..
NASDAQ:TLT
by Click-Capital