A newly flagged software issue on Boeing’s 737 Max 10 helped pull the Dow Jones Industrial Average to just under 51,500 on Monday, reversing about two-thirds of Friday’s advance, even as Nvidia rose 1.7% after announcing a record $150 billion buyback. The Federal Aviation Administration said it will not certify the Max 10 until it has assessed the problem; Boeing, which had expected approval within weeks, fell nearly 7% and lost more than $12 a share. The FAA administrator said the Max 7 was certified in August on software that fixed one bug but created another, prompting US airlines to revert to older versions where required, limiting disruption to new deliveries. Because the Dow is price-weighted, Boeing’s drop outweighed Nvidia’s gain by better than three to one in index points, and at Monday’s price Nvidia’s authorisation is roughly equal to Boeing’s entire market value.
Treasury yields extended their climb, with the 10-year above 5.2% and the 30-year near 5.5%, while the two-year rose about 0.17 of a point in the week to 25 September. The Fed lifted rates to 3.75%–4.00% on 16 September, and futures price the odds of another quarter-point move on 28 October near 70%, with the Dow down in six of the nine sessions since the hike. Markets also face August job openings at 14:00 GMT on Tuesday (7.23 million forecast versus 7.271 million), August PCE at 12:30 GMT on Wednesday (core 0.3% MoM and 3.4% YoY versus 3.3%), ISM manufacturing PMI at 14:00 GMT on Thursday (54.9), and September NFP at 12:30 GMT on Friday (84K versus 162K, unemployment 4.1%, and earnings 0.3% MoM). Technically, the index has not closed above 52,000 since 21 September, with resistance also at the 50-day EMA near 52,400; support sits near 51,400 and then 51,100–51,200, with the 200-day EMA near 50,300, while daily Stoch RSI has turned up from around 22.
Defensive Options Trading In A Volatile Rate Environment
We advise derivative traders to position defensively in the coming weeks as the Dow Jones Industrial Average hovers just under the critical 51,500 level. With the 10-year Treasury yield climbing above 5.2%—a level not sustained since the pre-Great Recession era of 2007—equity valuations are facing intense pressure. We should look to exploit this volatility by targeting short-term put options on index tracking funds, especially if the index rallies toward the 52,000 resistance mark.
Historically, when Treasury yields rise rapidly over a short period, equity index momentum tends to reverse sharply as borrowing costs pinch corporate margins. For instance, during similar yield spikes in late 2023, the major indexes experienced swift corrections of 5% to 8% within weeks. We expect a similar pattern now, meaning traders should focus on buying near-the-money puts with October expirations to capture the potential slide toward the 51,100 support floor.
Macro Events As Catalysts For Options Strategies
The heavy macroeconomic calendar this week will serve as the ultimate catalyst for these options strategies. If Wednesday’s core PCE inflation rate meets or exceeds the 3.4% year-over-year forecast, the odds of an October Federal Reserve rate hike will likely solidify above 70%. In this environment, we recommend utilizing bear put spreads to mitigate premium decay while positioning for a breakdown toward the 200-day moving average near 50,300.
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