The NFP will Decide Prudential’s Fate

The NFP will Decide Prudential’s Fate
September 28, 2015

 
Prudential has over forty eight thousand employees around the world and is active in more than forty countries. These operations on four continents and more than one trillion in assets under management makes (NYSE:PRU) one of the world’s largest financial institutions.

Since January 2012 the company’s share price has tripled and many are asking if their next move will be bullish or bearish? Judging by the recent price action and looking at the move from the 1750 area to the current 1330, I would say the whole move lower will be corrective, and we should see at least some consolidation.

However, if consolidation does come, then a spike higher should be part of a head and shoulders pattern that should eventually break the neckline on the downside. It is difficult to predict now, but at least the chart tells us something: Prudential is really enjoying the low interest rate environment.

Since The Bank of England (BOE) started the “Assets Purchase Facility” many years ago (and still runs it), companies like Prudential strived in such environment. It should be mentioned here that The Bank of England is not a pro-active bank when it comes to the global economic environment, in the sense that it’s always following the moves made by the Federal Reserve of the United States. This has been pretty common, as the moves made by biggest central banks in the world are indicators for moves that other central banks should follow.

Considering the above, it is very difficult to believe that BOE is going to raise rates before the Fed raises them, and this moves the focus on to the other side of the Atlantic for us to find clues regarding what Prudential’s number are going to do.

The last FOMC meeting held one and a half weeks ago showed nothing but confusion as the press conference on that Thursday was pretty dovish. One day later, two Fed members spoke in hawkish tones, and then another week later, the Chairwoman herself spoke in a hawkish tone!

In other words, no one can really guess what is going to happen, and that brings us to the NFP (Non-Farm Payrolls) report that is to be released this Friday. If the NFP beats all expectations, chances are the Fed will be raising rates this year, and this would favor put options for Prudential.

On the other hand, if the NFP is disappointing, then chances are the lower move will see Prudential’s share price making a corrective move, and a spike here would threaten value of the company.

Therefore, call options on a disappointing NFP number and put options on a better than expected release is the strategy for Prudential, both with an end of October expiration date.

Avatar

Andrew Wright

Prior to founding tradersasset.com in 2014, Andrew worked as a proprietary trader, then as a market maker. As a market maker, he traded options in over 100 stocks, he then began trading currency pairs in 2013. Andrew still actively trades both, and prides himself on educating and informing traders on the benefits of both Binary Options and Forex.


Related Articles

Volkswagen Reports Record Car Deliveries In 2018

  In 2018, Volkswagen AG (OTC: VLKAF, ETR: VOW3) posted another annual sales record as fresh SUV models significantly boosted

Petrobras Up on Lower Debt, Decline in US Oil Inventory

  The world’s most leveraged (indebted) oil company Petroleo Brasileiro S.A. (NYSE: PBR) reported a lower than anticipated fiscal 2017

Boeing Turns Weak On Trump’s Import Tariff Plan

  US stocks broadly fell yesterday, following the resignation of Gary Cohn, the economic adviser to President Donald Trump. Cohn,