Bullish on the S&P 500 or the Nasdaq 100? ETFs aren't the only way to play it

The Edge Singapore11-04

As a savvy trader, you can use options to take advantage of shorter-term movements in the market.Americans will head to the ballots today to vote for the 47th President of the United States, and most ...

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ETFs aren't the only way to play it","media":"The Edge Singapore","content":"<div>\n<p>As a savvy trader, you can use options to take advantage of shorter-term movements in the market.Americans will head to the ballots today to vote for the 47th President of the United States, and most ...</p>\n\n<a href=\"https://www.theedgesingapore.com/capital/investing-strategies/bullish-sp-500-or-nasdaq-100-etfs-arent-only-way-play-it?utm_source=Blog&utm_medium=RSS&utm_campaign=Tiger_Brokers_app_RSS\">Source Link</a>\n\n</div>\n","source":"edge_highlight","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Bullish on the S&P 500 or the Nasdaq 100? 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ETFs aren't the only way to play it\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-04 09:11 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.theedgesingapore.com/capital/investing-strategies/bullish-sp-500-or-nasdaq-100-etfs-arent-only-way-play-it?utm_source=Blog&utm_medium=RSS&utm_campaign=Tiger_Brokers_app_RSS><strong>The Edge Singapore</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>As a savvy trader, you can use options to take advantage of shorter-term movements in the market.Americans will head to the ballots today to vote for the 47th President of the United States, and most ...</p>\n\n<a href=\"https://www.theedgesingapore.com/capital/investing-strategies/bullish-sp-500-or-nasdaq-100-etfs-arent-only-way-play-it?utm_source=Blog&utm_medium=RSS&utm_campaign=Tiger_Brokers_app_RSS\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"OEF","symbol_name":"标普100指数ETF-iShares","start_time":0,"source_url":"https://www.theedgesingapore.com/capital/investing-strategies/bullish-sp-500-or-nasdaq-100-etfs-arent-only-way-play-it?utm_source=Blog&utm_medium=RSS&utm_campaign=Tiger_Brokers_app_RSS","article_id":"2481516215","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2481516215","pubTimestamp":1730682672,"sourceInfo":{"source_id":"edge_highlight","name":"Edge"},"weMediaInfo":null,"summary":"As a savvy trader, you can use options to take advantage of shorter-term movements in the market.","collect":0,"end_time":0,"defaultTopTitle":"theedgesingapore.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"OEF":"标普100指数ETF-iShares","QLD":"纳指两倍做多ETF","BK4593":"纳斯达克ETF","VOO":"Vanguard标普500ETF","TQQQ":"纳指三倍做多ETF","BK4534":"瑞士信贷持仓","IVV":"标普500指数ETF","BK4585":"ETF&股票定投概念","PSQ":"纳指反向ETF","FDN":"First Trust Dow Jones Internet I","SDS":"两倍做空标普500ETF","ONEQ":"Fidelity NASDAQ Composite Index ETF","UPRO":"三倍做多标普500ETF","BK4559":"巴菲特持仓","BK4550":"红杉资本持仓","BK4588":"碎股",".IXIC":"NASDAQ Composite","OEX":"标普100",".SPX":"S&P 500 Index","BK4561":"索罗斯持仓","BK4581":"高盛持仓","QID":"纳指两倍做空ETF","SSO":"两倍做多标普500ETF","SH":"标普500反向ETF","BK4504":"桥水持仓","SPXU":"三倍做空标普500ETF","SQQQ":"纳指三倍做空ETF","SPY":"标普500ETF"},"translate_title":"看好标普500还是纳斯达克100？ETF并不是唯一的玩法","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{".SPX":1,"VOO":1,"SPY":1,"ONEQ":1,".IXIC":1,"FDN":0.68,"OEX":0.6,"UPRO":0.6,"TQQQ":0.6,"SSO":0.6,"SQQQ":0.6,"SPXU":0.6,"SH":0.6,"SDS":0.6,"QLD":0.6,"QID":0.6,"PSQ":0.6,"OEF":0.6,"IVV":0.6,"NQmain":0.6,"MNQmain":0.6,"ESmain":0.6},"content_text":"As a savvy trader, you can use options to take advantage of shorter-term movements in the market.Americans will head to the ballots today to vote for the 47th President of the United States, and most polls are predicting a close race between Republican Donald Trump and Democrat Kamala Harris.\nAs it stands, markets are currently pricing in a Trump victory, which is expected to bring with it higher tariffs, lower corporate taxes and higher spending growth, among others. Sectors such as traditional energy, defence and technology are expected to be key beneficiaries should Trump triumph. Yet, should Harris prevail, sectors such as clean energy, healthcare and infrastructure, could be expected to benefit instead.\nRegardless of who wins the US presidential elections, one thing is for certain — the broader stock market is expected to see a short-term boost. This is due to the “Presidential Cycle” theory, which postulates that there is a predictable pattern of stock market returns after the election of a new US president. The cycle has been studied and referenced by economists and market strategists, where they look at the first year of US presidents in office in an economic and investment context. \n“Generally, the stock market tends to do well in this period as [the newly elected President] tries to keep their promises made throughout their campaign trail,” Isaac Lim, chief market strategist of Moomoo Singapore, told The Edge Singapore. “Investors should thus look to gain exposure to the US market, regardless of the election outcome.”\nInvestors who are unsure about which sectors to look at can invest in the broader market index such as the S&P500 and Nasdaq, Lim adds.\n\nETFs or futures?\nETFs are popular among investors seeking exposures to broad market indexes. These include the Vanguard 500 Index Fund (VOO) and the SPDR S&P 500 ETF Trust (SPY) that track the S&P 500, as well as the Invesco QQQ Trust (QQQ) and Fidelity Nasdaq Composite Index ETF (ONEQ) that track the Nasdaq.\nMore advanced traders could, however, utilise equity index futures, such as CME Group’s Micro E-mini S&P 500 Index Futures and the Micro E-mini Nasdaq-100 Index Futures, for exposure to US indexes.\nThese futures contracts offer several advantages compared to ETFs, such as superior liquidity, as well as capital and operational efficiencies for investors to hedge and express their views on their preferred equity index markets, according to Lim.\n“For US$10,000 of exposure to the S&P500 via the SPY, an investor will require a capital outlay of the same amount. But an investor utilising the Micro E-mini S&P 500 Index Futures will likely only require less than half the amount,” says Lim.\nMoreover, equity index futures provide leverage, as the trader can control a larger position with less capital. Futures are available in different sizes to accommodate the trading needs of different investors, offering the same benefits at smaller contract sizes.\n“Using the same example as above, should the S&P 500 move 5% higher, your exposure to the SPY will result in an equivalent 5% gain while the E-mini S&P 500 Index Futures will provide you with an exponential leveraged gain.”\nAnother key advantage is that futures provide investors with a way to express their short or sell views. Investors do not need to worry about locating stocks in advance, and can easily express their short views at any given time of the day.\nFutures are also commonly used to hedge against price fluctuations. Lim explains: “Instead of buying an ETF — which essentially is a basket of stocks, not all of which you have full conviction in — why not buy specific futures contracts to provide hedging risk?” He adds that ETFs usually come with a management fee, expense ratio, or financing cost. Furthermore, ETFs traded in US markets have taxable gains.\nSo, which instrument should savvy investors utilise? There isn’t a one-size-fits-all approach, according to Lim. From a trading and investing perspective, a savvy investor would not want to purely hold ETFs. Lim recommends making use of index futures and taking advantage of the lack of management fee and financing costs for futures.\n“It really depends on one’s strategy, conviction level, risk appetite and time horizon, among other factors. Options or futures can offer quicker returns for shorter-term traders. ETFs are generally designed for longer-term diversified exposure as an ETF comprises a basket of stocks or indices,” Lim notes. “If there are short-term gains to be made, why not take advantage by using leverage to gain more exposure to the market?”\nAlternatively, those invested in the stock market index for the long term that only see a bit of downside risk can sell options on the index through products such as index-based options. “A short-term income strategy is to sell index options while holding the main index. This is a way to protect downside while investing for the longer-term upside,” Lim says.\n“Taking everything into consideration, there is no single strategy investors have to follow strictly to position their portfolio, at least for the rest of the year. Investors and traders should consider a multitude of strategies to take advantage of volatility while protecting downside risk, or even to gain short-term profit such as through trading options.”\nBeyond the market indexes\nBeyond the presidential elections, themes such as the pace of further interest rate cuts and tech earnings are also reasonably expected to affect the movement of investable asset classes, especially in the US market.\nLim believes it is important for savvy investors to remain invested in the US market — even if one looks beyond the typical market indexes.\nThe cost of staying on the sidelines can be a prohibitive one, particularly with inflation set to stay elevated for longer. Over time, the value of uninvested money erodes, says Lim. The opportunity cost of staying uninvested may become overbearing as it compounds. Savvy investors should explore the various investable asset classes, based on their risk and return profile, and not expect money sitting at home or their bank accounts to be sufficient to combat inflation.\nMultiple statistical studies show that the US stock market tends to stay in an uptrend over the long term. Given this, Lim recommends investors to stay invested in the US stock market. Interest rates are also an important theme over the past two years, where investors may consider investing in real estate in anticipation of lower rates.\n“Investors should be careful when considering interest rates, as inflation is still sticky despite the Federal Reserve [Fed] cutting interest rates. Over the past few weeks, we are starting to see an uptick in US 10-year yields from around 3.6% to around the 4.2% level currently,” Lim says. He suggests that US treasuries should still be considered as part of an investor’s portfolio, but to reduce exposure in light of Fed chair Jerome Powell seeing further cuts on the horizon leading into 2025.\nGold and silver still precious\nLooking at commodities, gold is up over 30% year-to-date. Since February 2024, gold has been reaching an all-time high every month. Lim explains the reasons behind the gold rally: “At the start of the year, there were many reports suggesting that the Chinese government was buying and accumulating physical gold.” Now, the leading narrative has shifted to lower interest rates and risk events that increase volatility in markets. “As interest rates come off, gold as a precious metal does not fluctuate as much as interest-rate related products over the shorter term, and is seen as a better store of value,” Lim explains. Furthermore, as risk events increase volatility in markets, gold is viewed as a safe haven for investors.\nSilver, on the other hand, has just seen a decade-high. Although silver has not been making monthly highs, it is still worth considering as an investment. “Comparing silver and gold prices, silver generally plays catch-up to gold prices, and investors can play this relationship by buying into silver futures,” Lim suggests. Investors should consider finding exposure to more precious metals like gold and silver, at least during this quarter.\nThe trend is your friend until it ends \nAs a savvy trader, you can use options to take advantage of shorter-term movements in the market. Lim advises: “If you’re a short-term trader, you should have a pool of capital allocated to a long-term strategic portfolio. If you’re holding gold and silver for the long term, you could sell covered calls, options on gold ETFs, or gold index options to collect premiums — potentially enhancing income over the short term.”\nIf investors see increased volatility over the short term, they should consider trading VIX options. Options are a leveraged derivative which allows investors to control a larger position size with less capital. It should be noted that it is riskier trading shorter term with increased volatility in the markets. For more experienced traders, Lim suggests taking advantage of short-term movements and swings in the market during periods of increased volatility. Despite the short-term fluctuations of the US market, a savvy investor should consider the longer-term picture. “Don't miss the forest for the trees. With every market correction, there will come a time where the market recovers and continues to stay on an uptrend.”\nAdvice for 2024\n“If investors ask how to approach the market for the rest of 2024, I would suggest staying invested in the US stock market over the longer term while trading options over the shorter term to enhance income and reduce downside risk. Although investors should stay invested in bonds, they should consider reducing exposure and allocate more to silver and gold,” Lim advises.\nSavvy investors and traders should learn to use tools such as index futures and index options to optimise and reduce leakages for their portfolios. If they wish to trade index options for the US stock market, for example, they could consider using CME’s equity index options.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2481516215"}