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The FOMC released their statement today and the June raise is looking unlikely. 2016 will probably be the year when interest rates get back to normal but for now all stocks could do was muster a .10% move in the big indexes either way. We are starting to tilt toward good news is good news again but the sub normal rates and stocks are showing the indecision today with VIX trading 2015 lows.
With the launch of VXUP and VXDN shares by accushares, the issuers of UVXY slipped in that the ETN is reverse splitting 5 for 1....again. 2 years ago, split adjusted UVXY was about 200 dollars, thus it has lost about 96% of its value. Kind of a rough go.
This blog has made note multiple time that the bond market has started to move. What is important to understand is that unlike markets like gold, or even currency. If the bond market moves out of its range so will the stock market. However, there is a more important point to made with bonds right now: its too cheap to own gamma. Take a look at 10 and 20 day realized volatility relative to implied.
The answer is at least two days. Yesterday and today.
Today retraced most of the goldilocks rally in stocks on Friday. 2 days pass and without any real good news (TPP failed in the Senate) stocks had a hard time mustering anything. Early morning bond selling started things off on the wrong foot too. The reality is the fear is just not there as the big elephant is rates and the ECB is content to plod along with bond buying until the Greece issue passes. We only catches glimpse of what will happen when rates start to reset. For now that is just not happening.
Yes, today there was a huge trade in the VIX pit. It is only news because its a slow day. While that is a big trade it is no where near the biggest that pit has seen and would essentially be a light sneeze in SPX. To make matters more interesting, that is not the VIX index that is going to be leading. Many traders are noting that the SPX has been the tail to the bond market's dog. Well the VIX is likely to head the same way. We have seen increases in IV of FX and Oil affect the markets.