Cannon Futures Weekly Letter

In Today’s Issue #1291

• The Week Ahead – NFP, Earnings, Middle East Smoke Clearing?

• Crypto Cup – $50,000 Total Prizes!!

• Futures 102 – The Daily Briefing – What the Pros Know Before Trading

• July Soymeal Chart & Outlook

• Cannon Edge – Your Futures trading Map for the week ahead!

• Trading Levels for Next Week
• Trading Reports for Next Week

What Futures Traders Should Watch This Week

Options

By John Thorpe, Senior Broker

The Week Ahead

Non-Farm Payrolls Friday! With a few earnings, economic reports and fed speakers thrown in.

Under the Bull or Bear category for our clients who would care to better understand how options can complement your trading; I’ve put together a cheat sheet, please contact your broker to discuss the characteristics and how you can incorporate options into your existing strategy.

Futures Options Basics

Futures options (also called options on futures) are derivative contracts that give the buyer the right, but not the obligation, to enter into a futures contract at a specific price (the strike) by a certain date (expiration).

1. Quick Refresher: What is a Futures Contract?

• A futures contract is a standardized agreement to buy or sell an underlying asset (commodities, stock indexes, interest rates, currencies, etc.) at a predetermined price on a future date.
• Futures are marked-to-market daily and usually cash-settled or physically delivered.
• They are traded on exchanges like CME, ICE, etc.

2. What is an Option on a Futures?

Instead of trading the futures itself, you trade an option whose underlying is a futures contract.

• Call Option on Futures: Gives the buyer the right to go long (buy) the underlying futures contract at the strike price.
• Put Option on Futures: Gives the buyer the right to go short (sell) the underlying futures contract at the strike price.

When you exercise (or the option is auto-exercised at expiration if in-the-money), you don’t get the physical commodity or cash directly — you get a position in the futures contract at the strike price, plus any variation margin.

3. Key Terms

Term

Meaning

Premium

The price you pay to buy the option (quoted in points/ticks, just like the futures).

Strike Price

The price at which you can enter the futures if you exercise.

Expiration

Options on futures typically expire a few days/weeks before the underlying futures contract expires.

In-the-Money (ITM)

Call: Futures price > Strike Put: Futures price < Strike

At-the-Money (ATM)

Futures price ≈ Strike

Out-of-the-Money (OTM)

Opposite of ITM

American vs European

Most futures options are American (can be exercised any time before expiration).

4. How Settlement Works (Important Difference from Stock Options)

• If exercised, the call buyer receives a long futures position at the strike.
• The put buyer receives a short futures position at the strike.
• The option seller takes the opposite futures position.
• Because futures are marked-to-market daily, the account is immediately credited/debited the difference between the strike and current futures price.

Example:

• Crude oil futures are trading at $75.
• You buy a $72 Call for $2.50 premium.
• At expiration, crude oil futures are at $78.
• The call is worth $6 intrinsically ($78 – $72).
• You can exercise → you get a long futures position marked at $72 while the market is $78 → your account is credited $6 immediately.

5. Payoff at Expiration (Simplified)

• Long Call: Max(0, Futures Price – Strike) – Premium
• Long Put: Max(0, Strike – Futures Price) – Premium
• Limited risk (only the premium), unlimited potential gain (like stock options).

6. Major Advantages of Futures Options

• High leverage with defined risk.
• Often lower margin requirements than trading the outright futures.
• Very liquid markets for major contracts (S&P 500 / ES, Crude Oil / CL, Gold, 10-Year Treasuries, etc.).
• No stock borrowing issues or hard-to-borrow fees.
• Tax treatment in many jurisdictions (60/40 rule in the US for Section 1256 contracts).

7. Risks

• Time decay (theta) — options lose value as expiration approaches.
• Volatility changes (vega).
• You can lose 100% of the premium.
• Futures themselves are highly leveraged — so even though option risk is limited, the underlying moves can be large.

8. Simple Real-World Example (as of 2025 knowledge)

• E-mini S&P 500 futures (ES) trading at 5,800.
• You expect a rally before expiration → Buy the 5,850 Call for 45 points ($1,125 per contract, since $50 × 45).
• If ES rallies to 5,950 by expiration → intrinsic value = 100 points → nice profit.
• If ES drops to 5,700 → option expires worthless → you lose only the $1,125 premium.

We can trade either side of the market and prepare for volatility. On Monday, reach out to your broker for trading ideas. Bull or Bear, you really shouldn’t care.

Is the smoke clearing in the Mid-East and the markets have a renewed sense of confidence?

The energy and metals are swirling in the uncertainty of a lack of resolution in the attempted unwinding of the Iranian nuclear program.

Don’t let your guard down just yet, the fog continues, tune into the Sunday evening markets to witness reactions to the weekend news streams, manufactured or true.

  Plan your trade and trade your plan!

Earnings Next Week:

·        Mon. HP,

·        Tue. PaloAlto Networks, Dollar General

·        Wed. Broadcom, Crowdstrike, Macy’s

·        Thu. Ciena

·        Fri.   Quiet

FED SPEECHES: (all times CDT)

·        Mon. Quiet

·        Tues.  7:30am Hammack

·        Wed. 8:00am Barr, 3:00 pm Logan

·        Thu.  12:10pm Daly

·        Fri.   Quiet

Econ Data:

·        Mon. ISM PMI

·        Tue.   Redbook, JOLTS, API Crude Stock Change

·        Wed. ADP Employment Change Weekly, Factory Orders, EIA Crude stock Change

·        Thu.  Initial Jobless claims, EIA Nat Gas Stocks 9:30 am CDT,

·        Fri. Non-Farm Payrolls,  Baker Hughes Oil Rig Count

As a Cannon Trading client OR prospect, you’re invited to compete in the

Great Summer Escape Trading Competition featuring Coinbase Derivatives futures contracts!

From June 22 – July 2, trade in a simulated environment and compete for your share of $50,000 in prizes

Contracts include:

·    Etherium: Ether, nano Ether, nano Ether Perp-Style

·    Bitcoin: Bitcoin, nano Bitcoin, nano Bitcoin Perp-Style

·    Solana: Solana, nano Solana, nano Solana Perp-Style

·    XRP: XRP, nano XRP, nano XRP Perp-Style

Sign Up Now!

Futures 102: The Daily Briefing by Cannon

Every morning, the world’s biggest banks and macro strategists publish where markets are headed. The rest of the world waits for the headline.

That intelligence stays locked inside trading desks, institutional terminals, and private client portals — accessible only to the few who pay for the privilege, and even they only get what they pay for.

This briefing changes that (100% FREE on Cannon’s website!!). Every morning we scour the open web and aggregate everything that matters — pulling from publicly available sources so you never have to — and distill it into one clear, readable edition you can get through before your first coffee is finished.

No terminals. No subscriptions. No private portals. Just everything the market is saying, gathered in one place, every morning before the bell.

Read the Latest Briefing HERE and make sure to Bookmark this page!

June Emini S&P

The June Emini S&P satisfied its second upside PriceCount objective where it would be normal to get a near term reaction in the form of a consolidation or corrective trade. At this point, IF the chart can sustain further strength, the third could project a possible run to the 8720 area.

The PriceCount study is a tool that can help to project the distance of a move in price. The counts are not intended to be an ‘exact’ science but rather offer a target area for the four objectives which are based off the first leg of a move with each subsequent count having a smaller percentage of being achieved.

It is normal for the chart to react by correcting or consolidating at an objective and then either resuming its move or reversing trend. Best utilized in conjunction with other technical tools, PriceCounts offer one more way to analyze charts and help to manage your positions and risk.

Learn more at www.qtchartoftheday.com

Trading in futures, options, securities, derivatives or OTC products entails significant risks which must be understood prior to trading and may not be appropriate for all investors. Past performance of actual trades or strategies is not necessarily indicative of future results.

FREE TRIAL TO QT MARKET Center – Access to analysis, tools, news & much more!

Highly recommended for HEDGERS!

Cannon Edge — Your Daily Futures Insight for the Next Trading Day! Cannon Edge for June 1st, 2026

Cannon Edge is our new daily feature designed to give traders a fast, actionable overview of key futures markets. Each post delivers:

• Current price and daily % change

• 30‑day and 52‑week highs/lows

• PROPRIETARY Short‑term and long‑term trend signals

• Coverage across equity indices, metals, energies, currencies, and ags

Whether you’re scanning for breakout setups, trend reversals, or just staying informed — Cannon Edge puts the data in your hands before the open.

Built for speed. Backed by insight. Powered by CQG.

Daily Levels for June 1st, 2026

Trading Reports for Next Week

First Notice (FN), Last trading (LT) Days for the Week:

www.mrci.com

Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

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