Markets

Playing overnight moves in futures

(Chart courtesy of optionsHOUSE )

Stocks remain volatile, and futures traders are catching most of the moves.

ESZ5 (Dec '15) S&P 500 e-mini contracts swung from a low of 1910 late Tuesday night to almost 1942 the following morning. That 32-point move compares with a range of just 17 points on the normal S&P 500 cash index during the normal session.

The price action was consistent with recent trends. Most of Tuesday's drop, for instance, occurred before the opening bell during European hours. The same was true for much of Monday's rally, which in reality began Sunday night and for the big drop last Friday. The chart above illustrates how futures traders played moves unavailable to normal stock investors.

Every point in ES represents $50 in client accounts, so a buyer who caught all of yesterday's move would have made $1,600. That's about 31 percent of the $5,060 margin required to open the position.

Futures are likely to be active again this afternoon given that Federal Reserve Chair Janet Yellen is speaking at 5 p.m. ET. Durable-goods orders and initial jobless claims at 8:30 a.m. could also affect sentiment in the near term. Those events come with the S&P near the middle of its range following last month's big drop.

For more information on futures, please visit The Futures Institute (Powered by CME).

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

Options

Latest Markets Videos