I like a few high-conviction combination trades heading into tomorrow’s economic indicator expirations, including building permits, housing starts, and Hong Kong’s first-quarter GDP.
For permits, I like buying the “Yes” answer at the 1.40 million threshold for $0.90 and the “No” answer at 1.50 million for $0.70. The combination trade costs a total of $1.60 and would deliver $2.00 to the investor on a number as low as 1.41 million or as high as 1.50 million. In addition, I also like the prices on the “Yes” answer at 1.35 million and the “No” answers at 1.55 million, 1.60 million and 1.65 million, which range from $0.82 to $0.96.
For starts, I like the “Yes” answer at the 1.30 million threshold for $0.85 and the “No” answer at 1.50 million for $0.88. The combination trade costs a total of $1.73 and delivers $2.00 back to the investor on a number as low as 1.31 million or as high as 1.50 million. In addition, I also like the price for the “No” answer at 1.60 million for $0.93.
Looking to Asia, Hong Kong’s GDP grew at 3.1% year over year during the first quarter, according to the initial estimate. Tomorrow’s revised number is likely to range from more than 0.3% lower to more than 0.6% higher, so I like buying the “Yes” answer at the 2.7% threshold for $0.95 and the “No” answer at 3.7% for $0.93. The combination trade costs a total of $1.88 and delivers $2.00 back to the investor on a figure as low at 2.8% or as high as 3.7%, offering a buffer to the investor in case of a miss or beat.
Source for Images: ForecastEx
Note: Prices are highest bids as of the morning of May 15, 2025. Red circles around the thresholds were inserted by J. Torres to highlight his preferred “Yes” and “No” answers throughout different thresholds.
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