An analysis on Micron Technology (MU) earnings shows that short, dated straddles were highly profitable up until Q4 2019, after which these trades started experiencing significant losses. This is due to the realized underlying stock return post-earnings falling short of the market expectations.
Expectation for a “blue wave” has shifted market sentiment
With the initial shock to the markets seemingly over, and Fed policy set to “easy” to stimulate a recovery, rates markets have been subdued making it harder to see where the next opportunity is.
Could the Fed look to negative rates? The market will let you know.
If you have been paying attention to the short-term interest rate markets (STIRs), you undoubtedly know that volumes have fallen off in Eurodollar options.
Garnering a “Check The Facts” link on social media almost seem to be a badge of honour these days but here the facts support this fake-news headline.
For 5 days in a row under 1 million Eurodollar options contracts have traded.
With the excitement of NIRP subsiding, STIR futures and options are seeing a marked slowdown.
Volatility edged up slightly yesterday then turned lower today after a big straddle seller dragged the rest of the curve lower. Attention continues to be on the 100.00 strike and higher as NIRP questions loom large.
After a slow start to the week, there were large trades across many Eurodollar options expirations, a welcome development