I do not think today is the beggining of the end. That said, I think there is a good chance that there is at least a little follow through tomorrow (unless there is some sort of crazy surprize in non-farms). Even so, unless the market is down another 1%+ tomorrow, there is a chance the VIX might actually fall or remain relatively flat tomorrow. At the same time, I expect that VIX futures and the VIX ETN's might all be green tomorrow. Take a look at the VIX vs the CURVE at the close (there was a big TAS trade that ran VIX AUG up after the bell).
Ahead of the big premier of Sharknado 2 tonight, I thought it would be fun to look at a potential trade on Comcast, which owns NBC, which owns SYFY, which is showing Sharknado. Do not be surprized if this showing ends up being the biggest broadcast in SYFY history. While SYFY is not a large part of Comcast, whether it actually has an effect on long term earnings or not doesn't matter. I think the ratings on the broadcast will be so high that tomorrow CMCSA might get a small bounce. Regardless, the term structure is such that I think a sale of bullish front week calls might make some sense.
The EU and USA are starting to hit Russia with some bigger sanctions now as the international community is pressing the Russian leadership to end the turmoil in the Ukraine. Both bonds and VIX are rallying but the volatility futures are not really reacting too much near the end of the day. While I think this is bad for Russia short term it is much better that this is finally happening now.
Stocks looked ugly today after the weekend did not solve anything in either Gaza or the Ukraine. The POTUS threatened unilateral action against the tax inversion meisters and that seemed to get things going on a dumpy note. By midday all was forgotten. The dream merger between to social media darlings did not hurt.
Sometimes customers do really weird things. Sometimes its because they have a strange stock position. Sometimes its because they ahve been given bad advice by a cruddy broker. There are cases where the customer just has a strange idea on how to trade or has no idea how to trade. To be honest I do not know what this customer is doing in MU. Check out the volume and open interest in MU ITM call options in september.
I am going to skip the double whammy of the VIX up, SPX up today. Chalk that up to airplanes falling out of the sky and freaking folks out, which it should. All those overseas tragedies add up when it comes to volatility. I for one would like to see them end soon.
This day kind of reminds me of the anticipation before walking on a trading floor some mornings. Something is going to happen but you just don’t know what. The first instinct is to raise the bid in the options a little bit and do some price discovery. The corporate earnings news and economic data has been pretty good lately so the heeby geebies are not from there.
So that was fun while it lasted, but in truth it did not take volatility very long to realign itself right back to where it was. Take a look at the curve today and take a look at where it was 6 days ago on Wednesday the 16th.
With 4 ½ weeks to go in the VIX Aug cycle, there is not a lot of enthusiasm for the August VIX future. Is it cash too high or futures too low or just a combination of them both? There was an average mark up in VIX due to the weekend but not much more than that. Stocks sold off but really did not have a lot of gas to keep going down.
Step into the Wednesday time machine and not much happened between then and today. Traders have been so lulled into a stupor with the lack of movement that they bid volatility up to 15% yesterday when it looked like there was another crisis brewing. As of today no crisis, as holders of GOOG and other earnings reporters rejoice in the upside surprises.