Since its low point in the midst of the financial crisis in 2009, the S&P 500 has advanced by around 16.35% annually for the past nine years, making US equities one of the best performing asset classes in recent years. However, since the beginning of 2018 the market has been unable to keep up its winning streak, with the S&P 500 dropping from its peak of 2872 to about 2664 (-8 %) as of April 12th. With the changing monetary policy environment, the recent increase in stock market volatility, and the heightened uncertainty and geopolitical tension, we make the case that US equities are at an inflection point and recommend using a straddle strategy to profit from this market environment.

Analysts: Kasper Uhd Jepsen (MSc Finance) & Jack Crooks (MSc Economics and China)

Straddling.SP500.20180427.vF