With the US Elections tomorrow, current polls are showing that Clinton is in the lead by a few percentage points. The FBI’s announcement over the weekend that no further action will be taken against Clinton has lead to a huge relief rally in the S&P500 today. This DailyPlay special provides market expectations based on consensus views complied by Bloomberg of either candidate winning and how you can play each scenario using options.
Clinton Victory: consensus shows that a short term relief rally would likely continue. Longer term, banks and drugmakers may underperform on regulatory fears, especially if there is a democratic sweep in Congress and the House. Buying a Dec 7th 213/222.5 Call spread takes advantage of a steady move higher for a relief rally.
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Trump Victory: consensus shows a negative shock to US equities with the largest moves in interest rate sensitive stocks (financials & utilities) in the short term. Volatility is also expected to pick up and longer term, infrastructure stocks may outperform. Buying a Dec 7th 214 Put takes advantage of a quick move lower and higher volatility on a negative shock to markets.
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