The S&P 500 index recently closed just 0.01% lower after hitting a new high of 6,315.61. Despite some small changes, the index stays close to record levels as we await earnings reports from big tech companies, like Tesla and Alphabet. The Nasdaq 100 also ended slightly lower but reached an all-time high of 23,153.21, led by strong performances from Nvidia and Microsoft. At the same time, the Volatility Index dropped to 16.28, suggesting that market fear is decreasing. However, high volatility can still result in both market drops and rises.

Futures Trading Levels

Currently, S&P 500 futures are trading near 6,350. Experts see resistance at about 6,360 and support between 6,300 and 6,320. Market levels are shifting due to geopolitical events, leading to potential short-term volatility. On the other hand, crude oil prices fell by 0.3%, staying under the $68–70 range. Ongoing EU sanctions against Russia and U.S.-EU trade negotiations are influencing the market. Oil prices recently bounced back but remain uncertain due to concerns about global demand. Looking forward, the S&P 500 is set to open slightly higher, with a focus on corporate earnings. While optimism is strong, further gains may need new positive triggers. Since market strength relies heavily on a few tech stocks, which now make up over 34% of the S&P 500’s total value, the upcoming earnings reports are crucial. The direction of the entire index depends on how these companies perform and provide guidance. This situation creates a binary event where using a derivative strategy may be wiser than simply betting on the direction.

Opportunities in Volatility

The Volatility Index is trading near a low of 13, which means options are cheaper right now. This is a great opportunity to buy strategies like straddles or strangles on the Nasdaq 100 or key tech stocks before their earnings announcements. These strategies profit from significant price moves in either direction, eliminating the need to predict the outcome of the earnings calls. For traders who feel positive but cautious, we suggest using defined-risk strategies. For instance, a bull call spread allows participation in a potential rally while limiting the maximum loss if the market declines. This approach helps stay involved as S&P 500 futures test resistance near 5,500, especially with ongoing geopolitical uncertainty. We also recommend utilizing support levels to set up protective positions. Buying put options with strike prices below the 5,400 to 5,420 range can provide valuable insurance for long positions. Though FactSet anticipates a solid 9.0% earnings growth for Q2, any negative surprises could lead to a quick sell-off that such a hedge would protect against. In the energy sector, crude oil’s increase to over $80 a barrel amidst ongoing demand concerns offers its own chances. The volatility driven by sanctions and trade talks makes selling covered calls on long oil futures an appealing strategy. This can generate income while the commodity stabilizes, helping to reduce risk from potential price drops. Create your live VT Markets account and start trading now.

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