March T-note futures fell hard on Friday following the release of a better-than-expected jobs report. Non-farm payrolls rose 467,000 – roughly triple what the market was expecting. Prices sliced through our downside target of 127-00 in the March futures contract, making new swing lows in the process. Market action tells us to expect even lower prices ahead.

This market’s inability to manage much of an upside correction indicates how weak it is. Sideways price action over the past two weeks was enough to eliminate the severely oversold condition behind our recommendation to take money off the table in our mid-January blog post. No longer oversold, this market appears poised to move even lower. Our new, Fibonacci-derived downside target is 124-00 in the June futures contract.

Data Source: Reuters / Datastream

Let’s “Roll” Our Bearish Position into April

It’s time for RMB trading customers who purchased the March T-note 130-00 puts suggested in our November blog post to consider exiting all remaining positions immediately.  Consider using a small part of your proceeds to buy April T-note 126-00 puts (April puts trade off the June contract) as a replacement.

This accomplishes three things: 1) It gives us more time. March T-note options expire in 13 days. April T-note options expire in 48 days. 2) It lets us take more cash off the table. The March 130-00 puts we are exiting settled for $3,250.00 on Friday. The April 126-00 puts we replace them with settled Friday for $593.75. 3) It keeps us short a market we believe is going lower, for far less risk than we currently have.

The maximum risk of owning April 126-00 puts is the total premium paid plus transaction costs. Our new puts will be worth at least $2,000 per put if June T-note futures hit our new 124-00 objective prior to April option expiration on March 25, 2022. Prices can and will change, so contact your RMB Group trading professional for the latest.

Please be advised that you need a futures account to trade the markets in this post. The RMB Group has been helping our clientele trade futures and options since 1991. RMB Group brokers are familiar with the option strategies described in this report. Call us toll-free at 800-345-7026 or 312-373-4970 (direct) for more information and/or to open a trading account. Or visit our website at www.rmbgroup.com.  Want to know more about trading futures and options? Download our FREE Report, the RMB Group “Short Course in Futures and Options.”

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The RMB Group

222 South Riverside Plaza, Suite 1200, Chicago, IL 60606

 

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