Following the unexpected global financial market reactions to the Brexit vote and US Presidential elections, the upcoming French Presidential elections are more anticipated than ever and a major test for Euro zone unity.
The first round of the 2017 French Presidential Election will be held on Sunday, April 23rd where 5 candidates will seek a 50% majority. Should no candidate achieve a majority, a “run-off” election between the top two candidates will occur on May 7th, 2017.
Regardless of which candidate(s) move ahead to the subsequent round, the 1st round elections could bring intense market volatility to regional financial markets.
In the video tutorial below, Dan Gramza, an internationally renowned Chicago floor trader with over 30 years of experience in the markets, introduces trading strategies focused on the European Equity Index markets and reviews the potential market reactions into and following the initial election results.
Dan reviews reasons why it makes sense to keep a keen eye on the French results for proper market position and preparation via Eurex’s Equity Index and Volatility offerings.
Gramza suggests studying two markets around the French Presidential Election, the STOXX® Europe 600 & VSTOXX® Futures.
STOXX® Europe 600 Futures:
- Europe’s leading broad based benchmark & barometer for overall European market sentiment
- Over 11.7 mm contracts transacted in 2016
- Interest surrounding fundamental events in Europe tends to increase participation in this product
- 79 of the 600 STOXX Europe 600 components are French
VSTOXX® The European Volatility Benchmark:
- Similar to the CBOE Volatility Index or VIX, the VSTOXX® is designed to reflect investors sentiment & economic uncertainty by measuring 30-day implied volatility of the EURO STOXX® 50
- Appropriate tool to hedge outright exposure for the EU Equity Markets
- More concentrated than the VIX as the VSTOXX® is based on 50 stocks while the VIX and the S&P 500 evaluating 500 stocks.
- 25% of the 50 VSTOXX® are financials leading to more volatility when compared to the VIX that’s only 17% comprised of financials.
Dan Gramza is President of Gramza Capital Management, Inc. and DMG Advisors, LLC. He is a trader, consultant to domestic and international clients, advisor to hedge funds and a developer of futures, options and, ETF / ETC securities. Dan develops and presents worldwide public and private courses on a variety of technical and fundamental trading techniques and strategies. He set up and ran proprietary stock trading operations on the floor of the Chicago Stock Exchange, an off floor proprietary futures trading group and has given expert witness testimony in US Federal court. Dan has presented courses to traders from over 36 exchanges, 450 institutions, 4 regulators, and 35 countries.
He has published works in Australia, Europe, Japan, Singapore and the United States. Dan has appeared on CNN’s “Moneyline” program, Reuters TV, Bloomberg TV other numerous media outlets around the world.
Dan earned a B.S. in Engineering from the Illinois Institute of Technology on a scholarship and an M.B.A. in International Finance from DePaul University graduating with honors.