BY MARK SEBASTIAN 

August 30, 2023 

Hey Trader,

Since the S&P 500 bottomed on the 18th the index is up about 160 points from the lows.

The biggest parts of the move happened on Friday,  Monday, and Tuesday….

Tuesday is the biggest.

What caused the move? Bad economic data.

There was a bevy of bad data on Tuesday…notably consumer confidence that caused Treasuries to spike…

Check out what happened to IEF (the 7-10-year treasury ETF) when consumer confidence was announced:

That is a MASSIVE move in the 10-year represented there.

As I have stated for the past few weeks…bonds are driving stocks.

This move led to the biggest rally in stocks since April 27th!

The move was 64.32 points,  1.45%…almost a 21 VIX in the move.

Yet we still have a TON of market-driving economic data coming our way this week.

GDP is going to be released…a top 5 economic indicator…and Non-Farm Payrolls…after CPI the biggest economic indicator there is (in fact…it is usually bigger than CPI,  just not right now).

Thus…watching what was going on I was shocked when I looked at option prices.

This trend continued into the close.

We have 3 full days left this week 2 of which have HUGE economic data.

We moved almost 65 points on Tuesday…

Check out the price of the 4500 straddle (the cost of owning a put and call on the same strike)

It costs less than 45 dollars…

We moved more than that on Tuesday…

I can make money owning this…but it’s not as simple as it may seem.

Trading straddles and strangles takes an understanding of what is really happening in the market…and how your Greeks are moving as the SPX moves.

You have to manage and adjust as SPX rallies or falls…

Tonight at 7:00 ET, Andrew Giovinazzi and I will outline the 5 points of mastery that all pro-traders achieve… and how you can get there too. Sign up right here. 

Questions about anything? Leave a comment below!

Your only option,

Mark Sebastian