S&P 500 e-mini futures are up 10.56% for the year so far
Shortly after our last update, the S&P 500 made a sharp move downward to 5,036.25, followed by a rally to an all-time high at 5,368.25 on May 23. Since then, the market pulled back slightly.
S&P 500 e-mini futures (/ES) has an expected move to the downside near 5,210 over the next 27 days, based on the tastytrade platform calculation. The expected move to the upside over the next 27 days places it around 5,430.
Looking back at the price action of /ES since February, we can imagine a rough and vague range forming between $4,961 and $5,351.
If traders respect this range over the next four weeks, we can expect a move down from where we are now to the $5,000 level. If buyers are satisfied with the current valuation of the market, they will continue to retain control and push the market to new highs over the next few weeks, possibly sooner.
A note on earnings trades
To capture the bulk of the volatility of earnings announcements, earnings trades are often executed either the day before or on the day of the earnings announcement.
However, earnings trades can also be placed days or weeks before an earnings event, which could lead to early profit taking.
Alternatively, placing a trade shortly after an earnings announcement can be a strategic choice to circumvent the binary nature of the event. Evaluate each trade in a way that allows you to execute the position that matches your strategy.
If you're considering a trade going into an earnings event, one approach is to initiate the position in the monthly options contract that follows the earnings event. This strategy offers flexibility.
Should you need to defend your position–perhaps due to unexpected market movements–you have the choice to "roll" it out to the subsequent monthly options. Rolling out the position in this way allows you to extend its duration and potentially collect more premium, providing a buffer against market volatility.
Top 10 stocks to watch in March 2024
GitLab (GTLB) – June 3, After the close
Lululemon Athletica (LULU) – June 5, After the close
GameStop (GME) – June 5
DocuSign (DOCU) – June 6, After the close
Oracle (ORCL) – June 10
Carnival (CCL) – June 24
FedEx (FDX) – June 25, After the close
General Mills (GIS) – June 26
Micron Technology (MU) – June 26
CarMax (KMX) – June 28
1. GitLab (GTLB)
GTLB is currently down 9.11% for the year to date. Its current implied volatility rank (IVR) is 40.5, with June implied volatility (IVx) at 78.6, July IVx at 64.8, and its liquidity is rated 2 out of 4 on the tastytrade platform.
GTLB is a medium-priced stock so medium-sized accounts could consider underdefined risk positions. A one-standard deviation short strangle sets up well with a good credit to buying-power-used ratio. 30-delta $5-wide short spreads also set up well. Directional short spreads can be set up with your preference of directional assumption and amount of risk.
2. Lululemon Athletica (LULU)
LULU is currently down 39.77% year-to-date. Its current IVR is 81.8, with June IVx at 53.4, July IVx at 43.4, and its liquidity is rated 2 out of 4 on the tastytrade platform.
LULU is an expensive stock to trade, so most account holders will want to consider defined risk positions. A 20-delta short iron condor sets up well with a good credit to buying-power-used ratio. Directional short spreads can be set up with your preference of directional assumption and amount of risk.
3. GameStop (GME)
GME is currently up 4% year-to-date. Its current IVR is 40.5, with June IVx at 199.2, July IVx at 168.9, and its liquidity is rated 3 out of 4 on the tastytrade platform.
GME currently has significant call skew, so delta-neutral trades will have to be skewed to create a neutral position. That said, an iron condor will set up well with the short call side much further out of the money than the put side.
Directional short spreads can be set up with your preference of directional assumption and amount of risk. I would avoid undefined risk positions in GME due to the volatile nature of this underlying.
4. DocuSign (DOCU)
DOCU is currently down 3.62% year-to-date. Its current IVR is 42.6, with June IVx at 51.8, July IVx at 42, and its liquidity is rated 3 out of 4 on the tastytrade platform.
DOCU is a medium-priced stock so medium-sized accounts could consider underdefined risk positions. A one-standard deviation short strangle sets up well with a decent credit to buying-power-used ratio. 25-delta short iron condors also set up well. Directional short spreads can be set up with your preference of directional assumption and amount of risk.
5. Oracle (ORCL)
ORCL is currently up 19.79% year-to-date. Its current IVR is 29.8, with June IVx at 38.5, July IVx at 30.8, and its liquidity is rated 3 out of 4 on the tastytrade platform.
ORCL is a higher priced stock, so medium to large accounts could consider undefined risk positions. 22-delta short strangles set up well with a decent credit to buying-power-used ratio. 25-delta short iron condors also set up well. Directional short spreads can be set up with your preference of directional assumption and amount of risk.
6. Carnival (CCL)
CCL is currently down 18.46% year-to-date. Its current IVR is 22.7, with June IVx at 40.5, July IVx at 48.7, and its liquidity is rated 4 out of 4 on the tastytrade platform.
CCL is a cheap stock, so small accounts could consider undefined risk positions. A one-standard deviation short strangle sets up well with a decent credit to buying-power-used ratio. However, I think most accounts with a direction assumption will want to place wide in-the-money spread trades to take advantage of heightened volatility, which will bring the probability of profit (PoP) closer to 50/50.
7. FedEx (FDX)
FDX is currently down 1.67% year-to-date. Its current IVR is 34.5, with June IVx at 22.6, July IVx at 28.8, and its liquidity is rated 3 out of 4 on the tastytrade platform.
FDX is an expensive stock to trade, so most accounts will want to consider defined risk positions. A 22-delta $5-wide short iron condor sets up well with a good credit to buying-power-used ratio. Directional short spreads can be set up with your preference of directional assumption and amount of risk.
8. General Mills (GIS)
GIS is currently up 5.66% year-to-date. Its current IVR is 58.9, with June IVx at 19.2, July IVx at 23.1, and its liquidity is rated 3 out of 4 on the tastytrade platform.
GIS is a medium-priced stock so medium-sized accounts could consider underdefined risk positions. A one-standard deviation short strangle sets up well with an okay credit to buying-power-used ratio. A one-standard deviation short strangle can be turned into a $2.50-wide iron condor that provides a decent credit to buying-power-used ratio.
9. Micron Technology (MU)
MU is currently up 54.28% year-to-date. Its current IVR is 50.8, with June IVx at 42.3, July IVx at 48.7, and its liquidity is rated 4 out of 4 on the tastytrade platform.
MU is a higher priced stock, so medium- to large-sized accounts could consider undefined risk positions. A one-standard deviation short strangle sets up well, however, there it has some call skew, so adjust your strikes to your preference of risk. 23-delta short iron condors also set up well. Directional short spreads can be set up with your preference of directional assumption and amount of risk.
10. CarMax (KMX)
KMX is currently down 8.94% year-to-date. Its current IVR is 63.5, with June IVx at 49.9, July IVx at 42.5, and its liquidity is rated 3 out of 4 on the tastytrade platform.
KMX is a medium-priced stock so medium-sized accounts could consider underdefined risk positions. A one-standard deviation short strangle sets up well with an okay credit to buying-power-used ratio. 23-delta short iron condors also set up well. Directional short spreads can be set up with your preference of directional assumption and amount of risk.
Ryan Sullivan is an active options and forex trader and programming producer for the tastylive network.
For live daily programming, market news and commentary, visittastyliveor the YouTube channelstastylive(for options traders), andtastyliveTrendingfor stocks, futures, forex & macro.
Trade with a better broker,open a tastytrade accounttoday. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
