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$25 Million Dollar Election Night Trade in the S&P Futures

Capstone Trading


As traders, we like to anticipate what sort of trading opportunities and risks that we could see in the market based on certain events including the upcoming election.


In this video we look back to election night 2016 and an interview where Carl Icahn claimed to go long limit down on November 8, 2016. The S&P futures sold off and was limit down around midnight based on the uncertainty in the markets. The US equity markets are closed but the futures markets are open. This was a great opportunity, and Carl Icahn took advantage of it. This is a massive trade for most but based on $1 billion dollars, it is only a 2.5% gain.


Going long limit down the maximum number of contracts (5000), would have be a $535 million market position on election night 2016. The point value would $250,000. A 100 point move would be $25 million.


The index level is about 2.7 times higher so on a percentage basis, the 139 point range on election night in 2016 would be equivalent to a 375 point range at the end of October 2024.


Trading 5000 contracts at the current market price of S&P 5860 would be $1,465,000,000.00. A 375 point move with 5000 contracts would be $93,750,00.00.


The betting polls at predictit.org were back and forth in 2016 as well. It is interesting to watch. The risks should also be noted and managed when trading on election night. It is important to know where the limit move levels will be if you choose to trade. If you enter a long position above limit down with a stop loss below limit down, you could be stuck in a position that continues beyond your stop loss. Exchanges can also reject orders in fast markets so don't sleep with open positions in this type of market.


It is possible the market could move back and forth within the limit move ranges or it could hit multiple limit moves on election night and the days following the election.


Additionally, the FOMC interest rate decision is two days after the election. If the election is contested for days, it could create additional uncertainty. If the market rallies into the election, there could be strong selling or strong buying, after the election depending on the circumstances.


The biggest part of a strategy should be risk management.

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