Trade idea
NASDAQ Sell NASDAQ futures if the trade is considered extreme
The speaker suggests selling NASDAQ futures and buying Bitcoin futures if the trade is considered extreme. This indicates a belief that the current market conditions may be at an extreme, and the trade should be adjusted accordingly. The speaker's skepticism about the trade suggests a cautious approach to the strategy.
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StrategySell NASDAQ futures if the trade is considered extreme
Assetfutures
Time horizonNot explicitly stated
Entry / triggerIf the trade is considered extreme
Target / exitNot explicitly stated
Invalidation / stopNot explicitly stated
SpeakerSpeaker 1
Risks- Market volatility
- Incorrect assessment of market extremes
- Potential for significant losses if the trade is not properly managed
Trade idea
ZFM6 micro futures trading
The speaker is currently trading the ZFM6 futures contract, which is a medium-term US Treasury note. They suggest that for another suitable future options instrument, micro crude (MCL) or micro ES (MES) could be considered. The speaker also notes that ZFM6 is a viable option for micro futures trading, but other instruments like ZN or ZB are recommended for longer-term bond trading.
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Strategymicro futures trading
Assetfutures
ExpirationZFM6
Time horizonshort-term
Entry / triggermedium-term US Treasury notes
Target / exitnot specified
Invalidation / stopnot specified
SpeakerSolomon
Risks- Market volatility
- Liquidity issues
- Correlation with existing positions
Trade idea
Nasdaq Micro Futures iron condor
The speaker suggests waiting until the middle of next week or after the weekend to close the iron condor position. The reasoning is that the position is already in the middle of its life, and waiting a bit longer could allow for potential profit. The speaker also notes that rolling the position is not advisable, and the focus should be on closing it out at the right time. The risk is that the market could move against the trade, leading to a loss.
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Strategyiron condor
Assetfutures
ExpirationJuly 31
Time horizonWeeks
Entry / triggerPosition has been open for 22 days
Target / exitWait until the middle of next week or after the weekend
Invalidation / stopClose the position if the market moves significantly against the trade
SpeakerSteve
Structure / legs- short strike at 28,000
- long strike at 31,100
Risks- Market volatility
- Potential loss if the trade moves against the position
Trade idea
1-oz gold futures Trading 1-oz gold futures due to their liquidity and volatility
The speaker suggests that 1-oz gold futures are a good option for traders due to their liquidity and volatility. The speaker also notes that the trade can be profitable if the market moves in the expected direction, but it can also result in significant losses if not managed properly. The speaker emphasizes the importance of looking at the trade price rather than the day change to assess the trade's performance.
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StrategyTrading 1-oz gold futures due to their liquidity and volatility
Assetfutures
Time horizonShort-term, as the speaker mentions the trade was executed after hours and the market opened
Entry / triggerWhen the market opens and there is a significant move
Target / exitBased on the speaker's experience, the target is not explicitly stated, but the trade is considered fun and volatile
Invalidation / stopThe speaker mentions that the trade can result in significant losses if not managed properly, especially due to the volatility of gold
SpeakerJustin
Risks- Volatility of gold prices
- Potential for significant losses if the market moves against the trade
- Inconsistent settlement times for different products
Trade idea
ZN Put Selling
The speaker suggests selling 110 puts in ZN for April as a way to play for a bounce in the price of ZN. They note that the delta on the 10 puts is around 29, implying a 70% probability of profit. The break-even point is around 109.5, and the trade is based on the expectation that interest rates will decrease, leading to a rise in ZN prices. The speaker also mentions that the trade is a way to bet on either the end of a war or the continuation of the current status quo.
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StrategyPut Selling
AssetFutures
ExpirationApril
Time horizonShort-term (April expiration)
Entry / triggerZN at 110.27
Target / exitBounce in ZN price
Invalidation / stopIf ZN price falls below 109.5
SpeakerSpeaker
Risks- If ZN price falls below 109.5, the trade could result in a loss.
- Market volatility could impact the effectiveness of the trade.
- The trade is based on the assumption that interest rates will decrease, which may not materialize.
Trade idea
NG strangle
The speaker discusses a short strangle on natural gas (NG) with puts at 375/380 and calls at 450/455. They note a significant gap down on the opening, which they attribute to the inherent volatility of natural gas. The strategy is based on the expectation of a reversion to the mean after a large move up. The speaker acknowledges the difficulty of trading natural gas due to its high implied volatility and the potential for large price swings.
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Strategystrangle
Assetfutures
Expirationnot specified
Time horizonshort-term
Entry / triggervolatility reversion
Target / exitnot specified
Invalidation / stopnot specified
SpeakerVinny
Risks- High volatility
- Large price gaps
- Market maker behavior
Trade idea
CL Buy December CL future and sell current month CL future to play for a return to contango
The speaker suggests a calendar spread strategy involving CL futures to capitalize on a return to contango. This strategy is based on the idea that contango (where futures prices are higher than the spot price) can be exploited by buying a longer-dated future and selling a shorter-dated one. The speaker acknowledges that this is a common strategy but notes that it is challenging for retail traders due to capital requirements and the need for precise timing.
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StrategyBuy December CL future and sell current month CL future to play for a return to contango
Assetfutures
ExpirationDecember
Time horizonUncertain, depends on market conditions
Entry / triggerReturn to contango
Target / exitProfit from contango
Invalidation / stopMarket conditions that prevent contango
SpeakerTony
Risks- Capital requirements
- Market volatility
- Timing risk
Trade idea
MEES trading with a directional bias
MEES can become a big product very quickly in your account if you have a directional bias
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Strategytrading with a directional bias
Assetfutures
Time horizonimmediate
Entry / triggerhaving a directional bias
Target / exit50/50 shot
Invalidation / stopno specific stop mentioned
Speakerspeaker
Trade idea
Trade idea scalping
Scalping involves taking small positions based on immediate market conditions, such as when the market appears heavy. The trader starts with a small position (e.g., one or a few futures contracts) and adjusts based on market flow. If the trade goes in the intended direction, the trader may take profit or add to the position. If the trade goes against the position, the trader may sell another one or take off the position. The goal is to profit from short-term price movements without holding the position overnight.
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Strategyscalping
Assetfutures
Time horizonIntraday
Entry / triggerMarket looks heavy
Target / exitProfit on short-term price movements
Invalidation / stopIf market moves against the position, sell another one or take off the position
SpeakerScott
Risks- Market moves against the position
- Liquidity issues
- High transaction costs
Trade idea
NASDAQ Sell on the bounce
The speaker sold NASDAQ futures on the bounce after a decline, targeting a specific price level. The trade was based on the expectation of a short-term rebound, with a stop at the previous low. The trade was executed with a clear entry point and a defined target, indicating a disciplined approach to short-term trading.
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StrategySell on the bounce
AssetFutures
Time horizonShort-term
Entry / triggerMarket bounce after a decline
Target / exit30,299
Invalidation / stopMarket reversal or significant news event
SpeakerTony Batista
Risks- Market reversal
- Slippage
- Liquidity issues
Trade idea
ZN selling puts
The speaker is selling June 108 puts in ZN (10-year Treasury Notes) at around 30 ticks. The trade is based on the expectation that the price will not fall below the strike price, allowing the seller to keep the premium. The speaker mentions a pop of 70% and an IVR of 37, indicating a potential profit if the market moves as expected. The trade is considered a good opportunity due to the high IVR and the potential for a significant move.
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Strategyselling puts
Assetfutures
ExpirationJune
Time horizon39 days
Entry / triggerwhen the put price is around 30 ticks
Target / exitpop of 70%
Invalidation / stopif the price moves significantly against the trade
Speakerspeaker
Risks- Market volatility
- unexpected price movements
- changes in interest rates affecting the underlying asset
Trade idea
/GC put options
The speaker sold 3,500 puts on gold futures (/GC) with a 63-day expiration, expecting a 91% probability of profit based on the delta of 10. The trade was executed at $24 per contract, with a second tranche sold at $34. The speaker believes the trade is viable due to the mathematical relationship between delta and probability of profit, and the liquidity of the GC options compared to GLD.
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Strategyput options
Assetfutures
ExpirationAugust
Time horizon63 days
Entry / triggerGold trading around 4040-ish
Target / exitProfit from the probability of profit (91%)
Invalidation / stopIf gold significantly declines below the strike price
SpeakerSpeaker
Structure / legs- 63 days to expiration
- 3,500 puts
Risks- Significant price movement in gold could result in losses
- Time decay may reduce the probability of profit over time
- Market volatility could affect the liquidity of the options
Trade idea
6E sell calls or call spreads
The dollar is expected to rebound, which would likely result in a decline in the euro. To capitalize on this, one can sell call options on the euro (6E) as the most liquid futures options. This strategy assumes the inverse relationship between the dollar and euro, which is a common market dynamic. The trade requires futures trading approval and is suitable for traders with a $15,000 account.
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Strategysell calls or call spreads
Assetfutures
Expirationnot specified
Time horizonshort-term
Entry / triggerdollar rebound expected
Target / exitnot specified
Invalidation / stopdollar does not rebound or euro does not decline
SpeakerTom and Scott
Risks- Market conditions may change the inverse relationship
- Liquidity issues in the euro futures market
- Need for futures trading approval
Trade idea
10-year and 20-year futures buy bonds when they are down
The speaker has a strategy of buying bonds when they are down, which has worked so far this year. They are short puts in the bonds and have a call spread in the 10-year notes. The strategy is based on the idea that buying bonds when they are down can be a profitable move, and the call spread is used to hedge against potential losses. The speaker also emphasizes the importance of understanding the notional value of bonds, which is $100,000 per lot.
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Strategybuy bonds when they are down
Assetfutures
Expirationnot specified
Time horizonnot specified
Entry / triggerwhen bonds dip
Target / exitnot specified
Invalidation / stopnot specified
SpeakerScott Sheran
Structure / legs- long 109-110 call spread in 10-year notes
- short 108.5 and 109 puts in bonds
Risks- Market volatility
- Interest rate changes
- Liquidity issues
- Notional value risk
Trade idea
ES Put Spread
In a high volatility environment, shorting put spreads on the ES (E-mini S&P 500) can be a profitable strategy. By selling put spreads and widening the spread, traders can capitalize on market rallies while limiting downside risk. This approach is particularly effective when volatility is elevated, as it allows traders to take advantage of market movements without overexposing their positions. The strategy should be adjusted based on market conditions, with a focus on managing risk and taking profits when the market moves in the desired direction.
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StrategyPut Spread
AssetFutures
Time horizonShort-term
Entry / triggerHigh volatility environment
Target / exitProfit from market rallies
Invalidation / stopMarket moves against the short position
SpeakerScott
Risks- Market moves against the short position
- Volatility decreases
- Liquidity issues
Trade idea
ES Rolling out of expiring futures contracts
The speaker advises traders to roll out of expiring futures contracts before the expiration date to avoid the risk of the contract being closed out. The March ES contract is set to expire, and traders should consider rolling it out to April contracts to maintain their positions. This is due to the market's tendency to open lower during triple witching events, and the speaker emphasizes the importance of being cautious about shorting near expiration.
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StrategyRolling out of expiring futures contracts
Assetfutures
ExpirationMarch
Time horizonBefore the expiration of the March ES contract
Entry / triggerBefore the expiration of the March ES contract
Target / exitRolling out to April contracts
Invalidation / stopIf the March ES contract is not rolled out before expiration
SpeakerUnknown
Risks- Market volatility during expiration
- Potential for unexpected price movements
- Need to monitor and adjust positions before expiration
Trade idea
micro silver futures rolling out the position
The speaker is short Jan 66 calls for micro silver futures, which has experienced a parabolic move. The speaker is uncertain about whether to close, hold, roll out, or add a stop loss. The speaker suggests rolling out the position due to the high premium and the potential for a reversal. The speaker also emphasizes the importance of managing multiple positions and not letting a single trade dictate the entire portfolio.
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Strategyrolling out the position
Assetfutures
ExpirationJan
Time horizonshort-term
Entry / triggershort Jan 66 calls
Target / exitreversal to 66 or 60
Invalidation / stopstop at 87
SpeakerTom
Risks- The trade could result in significant losses if the price continues to rise
- The high premium may not be justified if the price does not reverse
- The market conditions could change rapidly, affecting the trade's outcome
Trade idea
ES/NQ pairs trading
Pairs trading between ES and NQ is a viable strategy due to their high correlation. The spread between these two contracts is likely to mean revert, providing opportunities for profit. Start with microcontracts and adjust the ratio based on market conditions. The key is to identify subjective extremes in the spread and start with small positions before moving to larger contracts.
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Strategypairs trading
Assetfutures
Time horizonshort-term
Entry / triggerspread between ES and NQ is at an extreme
Target / exitmean reversion of the spread
Invalidation / stopspread continues to move away from the extreme
Speakerspeaker
Risks- market volatility
- incorrect spread identification
- liquidity issues
Trade idea
natural_gas strangle
The speaker is short strangles on natural gas, adjusting positions daily by buying the guts and selling them back out. The strategy involves maintaining small positions and adjusting based on IV levels. The thesis is that the price will reverse or the IV will drop, allowing for profit. However, the risk is that the price could continue to rise, invalidating the trade.
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Strategystrangle
Assetfutures
Expirationcurrent_month
Time horizonshort-term (days to weeks)
Entry / triggerprice near 20-30 delta
Target / exitprice reversal or IV drop to 90
Invalidation / stopprice continues to rise beyond 30 delta or IV remains above 130
Speakertrader
Risks- High volatility can lead to rapid losses
- Price could continue to rise beyond expected levels
- IV may not drop as anticipated
Trade idea
NASDAQ scalping
The speaker scalped NASDAQ futures by buying at lower levels, indicating a short-term bullish bias. They mentioned buying NASDAQ futures down 450 last night and noted that the market was trading lower, suggesting a potential for short-term gains. The speaker also mentioned buying in 10% increments, indicating a cautious approach to position sizing.
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Strategyscalping
Assetfutures
Time horizonshort-term
Entry / triggerbuying at lower levels
Target / exitnot specified
Invalidation / stopnot specified
SpeakerScott Sheridan
Risks- Market reversal
- Slippage in fast-moving markets
- Inability to exit at desired levels
Trade idea
MEES scalping
The speaker advocates for starting with micro futures like MEES and MNQ due to their liquidity and lower capital requirements. Scalping these contracts allows traders to practice without significant risk, focusing on quick profits from small price movements. The strategy emphasizes discipline and staying with the trade until comfortable, avoiding the temptation to overtrade or prove a concept too quickly.
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Strategyscalping
Assetfutures
Time horizonShort-term, typically minutes to hours.
Entry / triggerStart with one micro contract and stay with it until comfortable.
Target / exitQuick profits on small price movements.
Invalidation / stopLosses on large price movements or if the trader is not comfortable with the strategy.
SpeakerSpeaker
Risks- Overtrading
- Market volatility
- Emotional decision-making
Trade idea
MEES scalping
Scalping futures requires understanding the expected move and setting profit targets between 20-40% of that move. The risk should be managed by setting a stop loss at 2x the expected profit. This approach helps in capturing small price movements efficiently while managing risk effectively.
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Strategyscalping
Assetfutures
Time horizonShort-term, typically within a single trading session.
Entry / triggerWhen the expected move is known and the market is within a defined range.
Target / exit20-40% of the expected move, which for MEES is between $50 and $100 if the expected move is $250.
Invalidation / stopLoss level should be set at 2x the expected profit, which would be $100 if the target is $50.
SpeakerUnknown
Risks- Volatility can cause larger-than-expected moves
- Market gaps can lead to unexpected losses
- Psychological pressure from frequent trading
Trade idea
MEES scalping
The speaker advises against hedging or spreading off a losing scalp trade. Instead, a scalp trade should be treated as a standalone position, and one should either take profit or accept the loss without attempting to hedge or spread off the losing scalp. This approach prevents confusion and potential worsening of the situation. The speaker also mentions that MEES is a liquid micro future with a $125 per tick and $5 a point, and a decent scalping range is 20 to 40% of the expected one-day move.
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Strategyscalping
Assetfutures
Time horizonshort-term (scalping)
Entry / triggershorting a future in crude oil or gold
Target / exit20-40% of the expected one-day move
Invalidation / stop2x loss is considered optimal
Speakerunknown
Risks- Confusion from hedging strategies
- Potential for increased losses if hedging is attempted
Trade idea
Trade idea selling premium
The speaker prefers trading NASDAQ futures or futures options to avoid single stock risk.
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Strategyselling premium
Assetfutures
Entry / triggershort NQ
SpeakerThe speaker
Risks- Single stock risk if short MOO
Trade idea
ES buying futures for trending markets
futures give the best bang for the buck
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Strategybuying futures for trending markets
Assetfutures
Time horizon3 months
Entry / triggerwhen markets start trending
Target / exit3-month time frame
Invalidation / stopif the market does not trend
Speakerunknown
Risks- carry cost
- market reversal
Trade idea
ZN contrarian
The speaker expresses a preference for selling puts in ZN, believing it to be a decent risk-reward opportunity. They describe ZN as being on its butt, indicating a potential for a rebound. The speaker also mentions a contrarian approach, suggesting that buying assets that are on their butt is a strategy they favor. The trade idea is based on the belief that ZN is undervalued and may rebound.
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Strategycontrarian
Assetfutures
ExpirationJune
Time horizonnot specified
Entry / triggerZN is on its butt
Target / exitnot specified
Invalidation / stopnot specified
Speakerspeaker
Risks- Market may not rebound as expected
- Volatility could lead to unexpected losses
Trade idea
ZB sell September 104 put and 112 call
rangebound
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Strategysell September 104 put and 112 call
Assetfutures
ExpirationSeptember
Time horizonimmediate
Entry / triggertoday
Target / exit41 ticks ($640)
Invalidation / stopoutside the expected move
SpeakerTom
Structure / legs- September 104 put
- September 112 call
Trade idea
Trade idea strangles
strangles can be effective if the stock price moves within expected range
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Strategystrangles
Assetfutures
Time horizonintraday
Entry / triggerearnings report
Target / exit55 or 60 cents
Invalidation / stopstock price movement
Speakerspeaker
Risks- unexpected volatility
- earnings surprises
Trade idea
MES directional trade
The speaker believes that MES can be traded directionally, and they personally trade it due to its micro contract size. They mention that they were long MES the previous night, expecting the market to rise, and they believe that the direction of the trade is key. They also suggest that the ratio of MES to other indices like MNQ depends on the current market conditions and notional balance.
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Strategydirectional trade
Assetfutures
Time horizonshort-term
Entry / triggerwhen the speaker believes the market is moving upward
Target / exitup 50 points
Invalidation / stopif the market moves against the trade
Speakerspeaker
Risks- market volatility
- incorrect directional assumption
- notional imbalance in pairs trading
Trade idea
MNQ pairs trade
A pairs trade is executed by selling one MNQ and buying two M2K. This trade is based on the relative weakness of the Russell compared to the MNQ. The trade is considered risky but offers an 80% reduction in risk. The trade is an example of basis arb or basis trade.
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Strategypairs trade
Assetfutures
Time horizonshort-term
Entry / triggerMNQ is up 160, Russell is weak compared to MNQ
Target / exit80% reduction in risk
Invalidation / stopMarket conditions change significantly
SpeakerDog ate AI
Risks- Market volatility
- Change in relative performance of the indices
Trade idea
MES futures shorting futures with defined risk
The speaker is shorting MES futures at 7475, 7485, and 7495, with the current price at 7518. The trade is based on the expectation that the futures will not continue to rise significantly beyond the initial risk. The speaker is considering taking profits at 7518, which is a 50% move from the entry point. However, the speaker is skeptical about the continued upward movement and suggests that the trade may need to be adjusted or closed if the price continues to rise.
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Strategyshorting futures with defined risk
Assetfutures
Time horizonshort-term
Entry / triggershorting at 7475, 7485, and 7495
Target / exit7518
Invalidation / stopif the futures continue to rise significantly beyond the initial risk
SpeakerStewart
Risks- continued upward movement of futures
- unexpected market volatility
Trade idea
MES Averaging down
The speaker sold MES futures at 7200 and discussed the potential for averaging down. They mentioned the market's volatility and the impact of events like Trump's plane trip on market movements. The speaker expressed uncertainty about holding the position but suggested holding due to the potential for further price movements.
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StrategyAveraging down
AssetFutures
Time horizonNot explicitly stated
Entry / triggerSold at 7200
Target / exitNot explicitly stated
Invalidation / stopNot explicitly stated
SpeakerThe speaker
Risks- Market volatility
- Potential for further losses
- Uncertainty about market direction
Trade idea
GC Start with micro futures contracts (MGC) to reduce risk and understand the contract size and notional risk. MGC is equivalent to 100 shares of GLD, making it a more manageable size
Starting with micro futures contracts (MGC) for gold (GC) is a practical approach to understand the contract size and notional risk. By comparing MGC to the ETF GLD, traders can better grasp the risk and size of futures contracts. This approach allows traders to start with smaller positions, reducing the risk of large losses while building their knowledge and confidence in futures trading.
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StrategyStart with micro futures contracts (MGC) to reduce risk and understand the contract size and notional risk. MGC is equivalent to 100 shares of GLD, making it a more manageable size
Assetfutures
Time horizonShort-term, with the goal of building a foundation in futures trading
Entry / triggerWhen the trader is comfortable with the ETF equivalent (GLD) and the micro futures contract (MGC) size
Target / exitNot explicitly stated, but the idea is to start with small positions and gradually increase exposure
Invalidation / stopIf the trader finds the micro futures contract too small or the ETF equivalent too large, they should consider other contracts or adjust their position size
SpeakerUnknown
Risks- Market volatility
- Leverage risk
- Inadequate understanding of futures mechanics
Trade idea
CL selling rallies
The speaker suggests selling rallies in the oil market, particularly using strangles on the CL contract. The idea is based on the belief that oil prices can move rapidly, and the speaker has previously sold premium on the CL contract, expecting the market to revert to a range. The strategy involves taking advantage of the volatility and the liquidity of the oil market, with a focus on short-term price movements.
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Strategyselling rallies
Assetfutures
Expirationnot specified
Time horizonshort-term
Entry / triggerwhen oil prices are rising rapidly
Target / exitnot specified
Invalidation / stopif oil prices continue to rise beyond the initial range
SpeakerBarry
Risks- Market can continue to rise, leading to losses
- Liquidity issues in the options market
- Volatility can lead to unexpected price swings
Trade idea
MCL straddle/strangle
The trader is short a straddle on micro CL futures at 71 strike, which expires March 17th. If the market remains within a range, the trader can profit from time decay. If the market moves significantly, the trader may need to roll the position to April, selling a put at a higher strike (e.g., 100) to hedge against potential assignment. This strategy is based on the expectation that the market will not move significantly, allowing the trader to profit from the decay of the options.
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Strategystraddle/strangle
Assetfutures
ExpirationMarch 17th
Time horizonUntil expiration
Entry / triggerMarket remains within a range
Target / exitProfit from time decay and potential assignment
Invalidation / stopMarket moves significantly beyond the range
SpeakerEric
Structure / legs- short put at 71 strike
- short call at 71 strike
- short put at 100 strike (April expiration)
Risks- Assignment if the market moves significantly
- Time decay may not be sufficient for profit
Trade idea
S&P 500 Re-entry after a decline
The speaker mentions buying back S&P 500 futures after a decline, indicating a belief that the market may rebound. The speaker also mentions taking a significant risk to break even, suggesting a high conviction in the trade. The trade is considered short-term, as the speaker refers to overnight trades.
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StrategyRe-entry after a decline
AssetFutures
Time horizonShort-term, as the speaker refers to overnight trades.
Entry / triggerAfter a decline in the S&P 500 futures, as observed in the transcript.
Target / exitNot explicitly stated, but the speaker mentions buying back S&P futures after a decline.
Invalidation / stopNot explicitly stated, but the speaker mentions taking a 'gazillion dollars in risk' to break even.
SpeakerMr. Sasnov
Risks- Market reversal
- Liquidity issues
- Unexpected volatility
Trade idea
MES tracking and monitoring
The speaker suggests that buying power requirements for MES will increase as the market moves upward. This is due to the percentage-based calculation of buying power requirements, which adjust with price movements. The speaker also notes that volatility (IV) could lead to higher requirements, but days to expiration (DTE) are unlikely to impact the model. The speaker concludes that while MES can experience large moves, the requirements for MES are not expected to change significantly, and traders should not worry about it as it is rare.
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Strategytracking and monitoring
Assetfutures
Time horizonlong-term
Entry / triggerMES continues to go up
Target / exitnot specified
Invalidation / stopif MES comes down
SpeakerUnknown
Risks- Market volatility could increase requirements
- Potential for unexpected price movements
Trade idea
2-year vs 10-year futures yield curve trade
The speaker suggests a 4:1 ratio of 2-year to 10-year futures contracts as a yield curve trade. This strategy involves using futures contracts to capitalize on the spread between the two instruments. The speaker mentions that the capital required is around $6,000, and the trade is considered low-risk due to the leverage provided by futures. The trade is based on the expectation of a change in the yield curve, and the risk is managed by keeping the position small and using a 4:1 ratio.
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Strategyyield curve trade
Assetfutures
Time horizonShort-term, with a focus on immediate risk
Entry / triggerWhen the yield curve is expected to flatten or invert
Target / exitProfit from the spread between the 2-year and 10-year futures
Invalidation / stopIf the yield curve moves against the trade, leading to a loss
SpeakerSpeaker
Risks- Market volatility
- Leverage risk
- Incorrect yield curve prediction
Trade idea
Trade idea Sell naked options on futures with a delta target of 22, aiming for the optimal premium with minimal risk of price breaches.
Selling naked options on futures with a delta target of 22 is optimal for maximizing premium while minimizing risk of price breaches. This approach is consistent with strategies used for equities and ETFs, and the mechanics remain the same across different instruments. The key is to ensure the position is in the active month and to maintain consistency in delta targeting.
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StrategySell naked options on futures with a delta target of 22, aiming for the optimal premium with minimal risk of price breaches.
Assetfutures
Time horizonShort-term, with a focus on rolling positions into the next active month.
Entry / triggerWhen entering the active month for futures options, ensure the delta target is around 22.
Target / exitMaximize premium while minimizing risk of price breaches.
Invalidation / stopIf the price breaches the delta target significantly, consider adjusting the position or exiting.
SpeakerUnknown
Risks- Price breaches may lead to significant losses if not managed.
- Market volatility can affect the effectiveness of the delta target.
- Rolling positions may require additional capital and careful timing.
Trade idea
Nasdaq Future Sell a Nasdaq future based on a perceived market downturn
The speaker's daughter was taught to sell a Nasdaq future based on a perceived market downturn. The trade was intended to profit from a decline in the index, but the market continued to rise, leading to a loss. This highlights the importance of market timing and the risks associated with shorting during a bullish trend.
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StrategySell a Nasdaq future based on a perceived market downturn
AssetFutures
Time horizonShort-term, with a focus on immediate market movements
Entry / triggerMarket at a perceived peak, with signs of a potential downturn
Target / exitProfit from a decline in the Nasdaq index
Invalidation / stopMarket continues to rise, invalidating the short position
SpeakerThe speaker
Risks- Market continues to rise
- Lack of stop orders
- Emotional decision-making
Trade idea
ZB Yield Curve Trade
This trade is based on the assumption that the yield curve will narrow as long-term rates fall faster than short-term rates. The trade involves buying one ZB contract and selling two ZN contracts, which is a classic yield curve trade. The trade is low risk and low reward, with potential daily movements of a few hundred dollars. The trade requires around $5,000 in capital and is considered a classic yield curve trade.
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StrategyYield Curve Trade
Assetfutures
ExpirationSEP
Time horizonShort-term
Entry / triggerYield curve widening
Target / exitLong-term rates fall faster than short-term rates
Invalidation / stopIf short-term rates fall faster than long-term rates
SpeakerSpeaker
Risks- Limited profit potential
- Capital requirements
- Market volatility
Trade idea
ZN Fade the initial move following a Fed announcement
The speaker suggests selling ZN (10-year Treasury Notes) if bonds move higher on a Fed announcement, as they have been trending higher. The speaker notes that fading the initial spike has not been very successful, but waiting a day or so and then fading the spike has been more effective. The speaker also mentions that they prefer ZN over ZB for shorting due to its lower volatility. The trade is intended to be a quick profit trade, not a long-term holding.
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StrategyFade the initial move following a Fed announcement
AssetFutures
Time horizonShort-term (scalp trade)
Entry / triggerIf bonds move higher on a Fed announcement, sell ZN
Target / exit10 ticks
Invalidation / stopIf the move continues beyond the initial spike
SpeakerSpeaker
Risks- The initial move may continue beyond the expected range
- Market volatility may affect the trade outcome
Q&A
Is learning futures options the natural next step after trading regular options, or should one get comfortable with straight futures first?
The speaker recommends learning futures options as the natural next step after trading regular options. They suggest that futures options are a progression from equity options and that trading futures is a different animal. They advise getting comfortable with futures options before jumping into futures directly.
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Actionable takeawayFutures options are a natural progression from equity options, and traders should get comfortable with futures options before moving to straight futures.
Q&A
What is the preferred method for scalping in the futures market?
The speaker prefers scalping the active month for futures and monthly options for options trading, maintaining consistency within the same expiration cycle.
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Actionable takeawayConsistency in expiration cycles is key for effective scalping strategies.
Q&A
What is a quick and dirty math to hold back for taxes if you have a hundred thousand dollar profit in futures?
A general rule of thumb is to allocate 20% of the profit to long-term gains and the remaining 80% to ordinary income. This allocation is based on the tax bracket of the individual. However, the actual tax rate may vary depending on the individual's tax bracket and state taxes.
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Actionable takeawayUse the 20% long-term gains and 80% ordinary income allocation as a general guideline for tax purposes, but consult with an accountant for accurate calculations.
Q&A
Is there any advantage of trading options futures futures options versus stocks ETF options?
It depends on the product. For example, Natty Gas is traded via futures options, while SPX and SPY are options for stocks. Tax advantages exist for SPX, but the speaker recommends trying both and staying with what feels comfortable.
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Actionable takeawayChoose between options, futures, or ETFs based on the product and personal comfort.
Q&A
When is it best to use ETF or ETF options and when is it best to use futures or futures options when trading commodities?
The speaker suggests preferring ETF options for high-level trading but recommends futures for specific commodities like oil (CL) and gold (GC) due to liquidity and tradability. ETFs are preferred for certain assets like silver (SLV) and gold (GC) based on liquidity and tradability. The key factors are liquidity, tradability, contract size, and risk leverage.
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Actionable takeawayPrioritize liquidity and tradability when choosing between ETFs and futures. Use futures for commodities with higher liquidity and tradability, and ETFs for specific assets like silver and gold.
Q&A
What do you think of single stock futures recently introduced by the CME?
The speaker is skeptical about single stock futures, noting their rocky history and past failures. They mention that these futures have not worked well in the past and are unlikely to succeed again, despite the CME's attempts. The speaker also notes that the CFTC does not allow the CME to offer them directly, but other firms can.
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Actionable takeawaySingle stock futures have a history of failure and are unlikely to succeed again, despite recent attempts by the CME.
Q&A
How can I convert a leveraged ETF position into a futures position?
To replicate a leveraged ETF position using futures, one must determine the number of shares typically traded and the daily movement of the ETF. For example, SSO (a 2x leveraged S&P 500 ETF) can be approximated by a certain number of S&P futures contracts. The exact number depends on the ETF's performance and the futures contract's price movement.
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Actionable takeawayUse the ETF's daily movement and the futures contract's price movement to determine the equivalent number of futures contracts.
Q&A
Is there anything wrong with an options and futures only portfolio?
There is nothing wrong with an options and futures only portfolio. It is a valid strategy that can be used to create synthetic long positions and benefit from option decay. The speaker mentions that this approach has been their entire portfolio and that it is a viable strategy for a small group of traders.
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Actionable takeawayAn options and futures only portfolio is a valid strategy that can be used to create synthetic long positions and benefit from option decay.
Q&A
Is it possible to use ES or MES instead of SPX for zero DTE trades with an account size less than $25,000?
Yes, it is possible to use ES or MES futures options as a substitute for SPX options. There are no PDT restrictions on futures or futures options, making them a viable alternative. MES is particularly suitable for smaller accounts due to its smaller contract size.
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Actionable takeawayTraders with accounts under $25,000 can consider using MES futures options for zero DTE trades as an alternative to SPX options.
Q&A
What's the notional size of the new single stock futures?
The notional size is 100 shares of stock for the standard version and 10 shares for the micro version.
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Actionable takeawayThe notional size is small, which is a positive aspect for risk management.
Q&A
How big is the natural gas contract?
The natural gas contract is described as a monster with high volatility. It is the most volatile futures options contract, with the highest volatility over the last 10 years. The contract size is not explicitly stated, but it is noted to be highly liquid and risky.
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Actionable takeawayNatural gas is a high-risk, high-volatility contract that requires careful position sizing and management.
Q&A
The broker requires initial margin under $30,000. is how much cash would be safe?
You shouldn't have your entire account wrapped in futures because you could get liquidated. If you have a $30,000 account, you're not trading ES, you're looking to trade me, which is a tenth of the size.
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Actionable takeawayAvoid over-leveraging your account by keeping a portion of your cash safe and not having your entire account exposed to futures trading.
Q&A
How important is building a watch list?
Building a watch list is important as it helps identify liquid market leaders and active indices that move the markets. Essentials include leading liquid market leaders, such as NQ, and focusing on commodities and futures that trade 24/5 and move markets.
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Actionable takeawayA watch list should prioritize liquid market leaders and active indices that influence market movements.
Q&A
Is there a way to approach trading the yen less directionally without using futures or forex directly?
The speaker suggests using FXY futures as an alternative to trading the yen directly, but acknowledges that there are other more profitable opportunities in the market.
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Actionable takeawayFXY futures can be used to trade the yen without direct forex exposure.
Q&A
What are your thoughts on single stock futures?
Single stock futures have been around for decades but haven't taken off. They've been redesigned to be more retail-friendly with a multiplier of 100 shares, offering 6 to 1 leverage compared to 4 to 1 for stocks. The speaker doubts they'll have a significant impact on the stock market, citing better liquidity in stocks.
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Actionable takeawaySingle stock futures are not expected to significantly impact the stock market due to better liquidity in stocks and the small leverage difference between stocks and futures.
Q&A
What type of liquidity do we need to see on the CME's new single stock futures?
High liquidity is needed before trading, and it's uncertain if any brokerage firms are offering them yet.
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Actionable takeawayHigh liquidity is required before trading CME's new single stock futures.
Q&A
What do I trade? How do I do it?
The speaker discusses trading futures, options, and crypto, emphasizing the importance of understanding market outlook and using micro futures for retail traders due to their lower capital requirements and higher leverage.
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Actionable takeawayMicro futures are recommended for retail traders due to their lower capital requirements and higher leverage compared to mini or full futures.
Q&A
I keep hearing that futures are more capital efficient than equity options.
Futures options are more capital efficient on entry compared to equity options, but the capital efficiency can vary depending on the specific contract and market conditions. Futures options typically require less capital due to dynamic margin requirements, but the efficiency may not hold throughout the entire trade lifecycle.
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Actionable takeawayFutures options are more capital efficient on entry, but the efficiency may change as the trade progresses.
Q&A
What is the ETF equivalent of a gold futures contract?
The ETF equivalent of a gold futures contract (GC) is 10 contracts of the ETF GLD. This equivalence helps traders understand the notional risk and contract size of futures contracts.
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Actionable takeawayTraders should understand the ETF equivalent of futures contracts to better grasp the notional risk and contract size.
Q&A
Can the wheel strategy be applied to futures options?
Yes, the wheel strategy can be applied to futures options. The strategy involves selling a put and then selling calls against the underlying asset if the put is exercised. This can be done on any liquid market, including futures, as options are priced similarly across different markets.
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Actionable takeawayThe wheel strategy is applicable to futures options, provided the market is liquid and the trader understands the associated risks.
Q&A
Will the buying power requirements in the MES ever vary due to IV or DTE changes?
The speaker is uncertain but suggests that buying power requirements for futures are typically a percentage of price movement and can vary with price changes. The CME or clearing firm can raise requirements as they see fit. IV could lead to higher requirements, but DTE is unlikely to impact the model. The speaker notes that while MES can experience large moves, the requirements for MES are not expected to change significantly, and traders should not worry about it as it is rare.
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Actionable takeawayBuying power requirements for futures like MES are percentage-based and can vary with price movements. IV may increase requirements, but DTE is unlikely to impact the model. Changes are rare and not a major concern.
Q&A
What is the recommended approach for trading the US 2-year versus 10-year Treasury note pairs trade spread?
Options on the 10-year Treasury notes (ZN) are recommended as a starting point due to their accessibility and lower risk compared to options on the 2-year Treasury, which are reserved for professionals. The 10-year notes offer a great entry point for learning futures options trading with minimal risk.
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Actionable takeawayTrade options on the 10-year Treasury notes (ZN) for a low-risk introduction to futures options trading.