CPI Rally and MICROS!! + Levels for May 16th

Bullet Points, Highlights and Announcements

By Mark O’Brien, Senior Broker

General: 

Last Wednesday’s blog included a happy birthday greeting to the Micro E-mini stock index futures contracts.  In 2019, Micro E-mini futures and options on the four leading equity indices – E-mini S&P, Nasdaq, Dow Jones and Russell 2000. – became the most successful launch in CME Group history.

But did you know there are Micro futures contracts for a wide range of commodities?

CME Group, the world’s leading derivatives marketplace offers micro futures and options across nearly it’s entire commodities portfolio.  Below is selection of some of the more widely traded Micro futures and options contracts:

Energy: 

→  Micro Crude Oil: 1/10 the size of the benchmark WTI Crude Oil contract (link to contract specs.)

→  Micro Henry Hub Natural Gas: 1/10 the size of the benchmark natural gas contract (link to contract specs.)

Metals:

→  Micro Gold: at just 10 ounces Micro Gold futures and options contracts are designed for traders interested in smaller gold increments with a cost-effective alternative to the world’s largest, highly liquid Gold futures and options contracts (link to contract specs.)

→  Micro Silver: at 1/5 the size of the 5000-ounce silver futures, the contract unit is 1,000 troy ounces. The Micro Silver futures are quoted in 1/10 of one cent– making a one-tick move equivalent to $1 (link to contract specs.)

→  Micro Copper: theses futures 1/10 the size of the 25,000-pound Copper futures contract, so, the contract unit of the Micro Copper futures contract is 2,500 pounds. Like the Copper futures contract, the Micro Copper futures contract is quoted in increments of 5 one hundredths of a cent, making a one tick move in Micro Copper futures equal to $1.25. (link to contract specs.)

The daily settlement prices for the futures contracts will be identical to that of the larger Gold, Silver and Copper futures contract.

Crypto: 

→  Micro Bitcoin: At 1/10 the size of one bitcoin, Micro Bitcoin futures provide an efficient, cost-effective new way to fine-tune bitcoin exposure and enhance your trading strategies.

All these contracts provide traders with more flexibility when trading futures.  With Micro contracts, you can scale positions up and down with precision and gain more control over your exposure.  At the same time, Micro contracts offer the same robust trading transparency and price discovery, but with smaller margin requirements, which translates to easier access to the potential of the futures markets – nearly 24 hours a day.

Diversify your portfolio and add flexibility for trading Precious Metals, FX, Energy, Rates, and Equity Indices. Scale positions up and down with precision and gain more control over your exposure.

Energy:   

Options five day a week; it’s not just for stock index futures.  Mark your calendars; starting Monday July 22, WTI Crude Oil options will be available with Tuesday and Thursday expirations alongside the already-available Monday, Wednesday and Friday expirations and monthly options.  Once in place, along with shorter expirations and lower premiums, WTI Weekly options will provide opportunities to hedge weekend headline risk, OPEC+ meetings or geopolitical events. They can also be used to express views on mid-week announcements, including the weekly E.I.A Petroleum Status Report, typically released on Wednesday.

Financials: 

On the interest rate front, some interesting news: in contrast with the wait-and-see mode of the United States, today Sweden followed Switzerland, Hungary, and the Czech Republic in easing monetary policy for the first time since interest rate hiking cycles began in 2022, when inflation surfaced in the aftermath of the COVID pandemic. The central bank of Sweden – the Riksbank – lowered its policy rate by 0.25 basis points to 3.75%, making it more likely that the European Central Bank will jump on the bandwagon. The shift is noteworthy as it highlights the current divergence among central banks around the world.

Grains:  

Ostensibly the report of the week in an otherwise humdrum 5-day stretch, this Friday the U.S. Department of Agriculture will release its monthly World Agricultural Supply and Demand Estimates (WASDE) report.  The report provides annual forecasts for supply and use of U.S. and world wheat, rice, coarse grains, oilseeds, and cotton.  The report also covers U.S. supply and use of sugar, meat, eggs and milk.  Simultaneously released is the monthly Crop Production report which contains crop production data for the U.S., including crop conditions, acreage, area harvested and yield.

Stock Indexes:  

Happy birthday Micro E-mini futures!  In 2019, Micro E-mini futures on the four leading equity indices became the most successful launch in CME Group history.  In just these first five years, over 2.6 billion contracts have traded.  The average daily volume reached over 2.4 million contracts across the four indices (up 355% since 2019).  And how about this for global reach: 24% of average daily volume came from outside of the U.S., with trades submitted from 170+ countries.

If you are a day trader, below you will see markets that our proprietary ALGO has identified as being more suitable for attacking either from the long side or the short side.

Questions? We are happy to help!

Daily Levels for May 16th, 2024

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* This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts here in contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgement in trading.