Double-Edged Sword: Capitalizing on NFP Volatility with Options
Today, we have crucial NFP and Unemployment data coming at 15:30. Expect high volatility both before and after the release. So, how can we set up a position to trade this volatility? Let’s see what we can do with a $22 cost.
It’s not unreasonable to expect over 5% volatility today. That’s why I want to keep my cost low while maximizing potential gains. $ETH is currently around 2360. A 5% move up would be 2480, while 5% down would be 2245. We’re still within the weekly 15% range. As you can see, the 2250 put is available for $12, and the 2475 call for $10.
I’m showing the September 8th contract because I believe volatility will continue after the data release. If you’re thinking more intraday, you might want to check out the September 7th contract.
If you look at data release days in general, you’ll notice that prices often leave wicks both up and down. The Fed’s main concerns are avoiding recession and maintaining workforce stability. So, if we get poor data, markets will likely react with selling. You can manage your position based on the data when it’s released.
Let’s look at one possible scenario to give you an idea of how to manage this trade.
If there’s an uptick before the data release, your call contract will be in profit. If the data comes in low, there will likely be a sharp sell-off. At that point, you could close the call contract and continue with just the put contract. This way, you maximize profit in both directions. The key here is good risk management and not trying to catch the exact top or bottom. While it’s nice that there’s no stop loss or liquidation, poor risk management could still result in selling your contracts at a loss.
Here’s hoping for a month of continued uptrends. Have a great day, everyone!
#NFPWatch #USDataImpact #CryptoMarketMoves #PowellAtJacksonHole #Ethereum
