JimHuangChicago

JimHuangChicago Wizard

NYMEX: Options on Micro WTI Crude Oil ( NYSE:MCO ), Underlying Futures: NYMEX:MCL1! Riding on last week’s story on TradingView, “Would the Middle East Conflict Push Gold and Oil Prices Higher?” let’s explore option strategy to hedge event risk. Last week, we’ve revisited the event driven strategy and how it could be leveraged to hedge event risk: • I...

JimHuangChicago Wizard

NYMEX: WTI Crude Oil ( NYMEX:CL1! ), COMEX: Micro Gold Futures ( COMEX_MINI:MGC1! ) Over the weekend, military conflict in Gaza between Israel and Palestine shocked the world. I condemn violence against civilians and pray for the victims and their families. In the following paragraphs, I will discuss how the prices of strategically important commodities, namely...

JimHuangChicago Wizard

CME: Micro Russell 2000 ( CME_MINI:M2K1! ) Global financial market orbits around Federal Reserve’s interest rate decisions. By concept, hiking interest rates means monetary tightening while cutting them signals easing. In reality, market perception to the Fed actions evolves over time, sometimes blurring the difference between “good news” and “bad news”. • On May...

JimHuangChicago Wizard

CME: USD/Mexican Peso ( CME:6M1! ) What’s the strongest currency in 2023? Hint: Not the US dollar. • Although dollar index has rallied nearly 6% in the past two months, it gained just 2.1 points, or +1.9%, year-to-date, to settle at 105.583 as of September 22, 2023. • British Pound futures ( SEED_TVCODER77_ETHBTCDATA:6B ) was up 2.0% YTD, to close at $1.225 per...

JimHuangChicago Wizard

CME: E-Mini S&P 500 Futures ( CME_MINI:ES1! ) Last Friday was the infamous “Triple Witching Day”, where US stock index futures, stock index options, and single-stock options contracts all expired on the same trading day. These phenomena happen only four times a year: on the third Friday of March, June, September, and December. In 2023, Triple Witching occurs on...

JimHuangChicago Wizard

CME: E-Mini Nasdaq 100 Weekly Options ($Q1D-$Q5D) When I first started trading two decades ago, I was overwhelmed by the amount of data that was available. I had a hard time correlating how data relates to price movement. While observing the stock market, I have one question in particular: why does the market often moves drastically immediately after the release...

JimHuangChicago Wizard

CME: Micro Russell 2000 ( CME_MINI:M2K1! ) On August 25th, Federal Reserve Chair Jerome Powell delivered his annual policy remark, “Inflation: Progress and the Path Ahead”, at the Jackson Hole Symposium. The message is very clear: It is the Fed's job to bring inflation down to the 2% policy goal. The Fed is prepared to raise rates further if appropriate and...

JimHuangChicago Wizard

30Y Micro Yield ( CBOT_MINI:30Y1! ), Micro Nasdaq ( CME_MINI:MNQ1! ), Chinese Yuan ( CME:CNH1! ), Live Cattle ( CME:LE1! ) On January 2nd, I published an idea titled “Year of the Rabbit: ‘Short-tailed’ Trading”. My outlook for the new year was: “In the new year, uncertainties will remain the key price drivers of global stock markets: central bank policy,...

JimHuangChicago Wizard

CME: USD/Offshore RMB ( CME:CNH1! ) Even though the Chinese Yuan is not a component in the US Dollar Index, Dollar-Yuan exchange rate generally tracks the dollar index. If dollar gains in value, most foreign currencies depreciate against it, yuan included. When dollar is weakened, the opposite holds true. Foreign currencies appreciate relative to dollar. ...

JimHuangChicago Wizard

CME: Live Cattle ( CME:LE1! ), Lean Hog ( CME:HE1! ) Last month, the Bureau of Labor Statistics (BLS) reported that US inflation on food items was 5.7% in June, exactly half of its peak of 11.4% in August 2022. Food inflation is at its lowest level since November 2021. Under the sub-category “Meats, poultry, fish, and eggs” from Food-at-home, the BLS data shows...

JimHuangChicago Wizard

COMEX: Micro Gold Futures ( COMEX_MINI:MGC1! ), Micro Silver Futures ( COMEX_MINI:SIL1! ) Is gold an inflation hedge, a risk protection, a precious metal commodity, or a speculative investment? I think it is all of the above. Sometimes it could be one of them, but quite often gold puts on multiple hats, as its price could be driven by competing forces. Gold as...

JimHuangChicago Wizard

CME: Micro Nasdaq 100 Futures ( CME_MINI:MNQ1! ), E-Mini S&P Technology Select Sector Futures ( CME_MINI:XAK1! ) The Nasdaq 100 index tracks the 100 largest non-financial stocks listed on the Nasdaq stock exchange. Since its inception over 38 years ago, it has become the world’s preeminent large-cap growth index. So far in 2023, Nasdaq 100 has surged 42%, far...

JimHuangChicago Wizard

CME: Micro BTC ( CME:MBT1! ) A month’s ago, I published a trade idea titled “S&P 500: Expensive but Not Overpriced.” The S&P index closed at 4,409.16 on June 16th, placing it at one standard deviation above the three-year mean (µ) of 4027.2 at the time. On July 14th, the S&P settled at 4,505.42, up 100 points and +2.2% within a month. Market data has confirmed my...

JimHuangChicago Wizard

CBOT: 30-Year Micro Yield Futures ( CBOT_MINI:30Y1! ), Treasury Bond Futures ( CBOT:ZB1! ) As a result of runaway inflation and rising interest rates, US home buyers are confronted by high home prices, high down payments, and high monthly mortgage payments. A sneak peek into official housing market data between 2021 and 2023: • Median sales price of houses sold...

JimHuangChicago Wizard

CME: SOFR ( CME:SR31! ) On June 30th, SEC Chairman Gary Gensler posted a 3-minute short video on Twitter. In this educational piece titled RIP LIBOR, he explains what the London Interbank Offered Rate (LIBOR) is, and why its passing away is actually a good thing for consumers. As CFTC Chairman in 2009-2014 and SEC Chairman since 2021, Mr. Gensler oversaw the...

JimHuangChicago Wizard

NYMEX: WTI Crude Oil ( NYMEX:CL1! ), Micro Crude Oil ( NYMEX:MCL1! ) The talk of inflation deceleration created a wishful misperception. Does a CPI read from 9.1% to 4.0% mean price relief for consumer? Certainly not. Something costed $1 last year will go up to $1.04 this year on average. What really comes down is the rate and the pace of price increase, but the...

JimHuangChicago Wizard

CME: E-Mini S&P 500 ( CME_MINI:ES1! ), S&P Technology Sector ( CME_MINI:XAK1! ) These days, the S&P 500 is not behaving like a well-diversified stock market index. The “Magnificent Seven”, which includes Nvidia NASDAQ:NVDA , Apple NASDAQ:AAPL , Tesla NASDAQ:TSLA , Microsoft NASDAQ:MSFT , Google NASDAQ:GOOGL , Meta NASDAQ:META and Amazon NASDAQ:AMZN , is...

JimHuangChicago Wizard

Nasdaq 100 Index ( NASDAQ:NDX ), S&P Midcap ( SP:MID ) Since Jack Bogle created the first stock index fund in 1974, he has shown that passive investing in low-cost index mutual funds could beat active fund managers after cost. These days, there are countless of stock indexes and thousands of index funds to choose from. Picking the right market index, which I...