Andrew Giovinazzi's blog

Which blinks first, the VIX or the SPX?

The market got to a point today where it looked over the wall and could not take the plunge one way or the other.  The S&P 500 E-mini could not hold onto the highs of the day and the VIX could not hold onto the lows of the day.  So, how did it end up, and what did it mean?

As you can see from my illiterate scrawl on the chart, the VIX made a new near term low and promptly decided that was low enough.  The rally in the VIX led the market to decline from its peak by about 30 min.

 

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XIV and VXX finally cross so is the VXX reverse split far behind?

I love the low volume rallies.  One thing about market players is that they start to know the game.  Good employment news is out, and the market took off this morning.  At this point, traders who need to sell stock just wait as the news driven algo guys bid up the market in an attempt to chase the news.  One thing we have been watching is the slow decline of volatility this last couple of days.  The market has been almost all news driven out of Europe since mid – July (and mo

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Is there a trade in the drought? Mark Sebastian's analysis on Mad Money

Mark's analysis on CNBC's Mad Money: HERE 

Despite the affect Europe is having on the US stock market, it is not the European debt crisis that might have the strongest effect on corporate profits in the US.  And it certainly is not Europe that will have the greatest effect on many of the products Americans buy every day.  It is likely to be Corn and Soybeans that will determine the profits of many multinationals.

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Have you missed the run in Walgreens?

The announcement by Super Mario to “do what is necessary” is a welcome relief for the markets.  For the most part, the volatility markets, which I watch closely, have been balanced on a knife edge of moving sharply up or down.  Today the move is distinctly down.  One name I follow has pretty much ignored all of the activity recently, Walgreens (WAG).

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When will someone give us our market back?

Two years into the Euro Crisis and the only thing I have to show for it is a joke.  How long does it take a Euro Finance minister to screw in a light bulb?  Two years and counting….  Anyways, the strange state of the equity markets usually spill out into the volatility markets, and today was not a whole lot different.

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The Anatomy of a (not good) Trade

 With the earnings season coming into full swing and going a bit better than most expected, I thought it would be a good time to dissect a trade we did at Option Pit that did not work out quite as we thought it would. Usually, when I lose money on a trade, I like to go back and see if there is anything I missed.  For the example below, it was relatively simple, but it is a good exercise to figure out what went wrong.   

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The Reverse Option Pit Cross

Charts by Livevol (r)   www.livevolpro.com

Part of the fun of being in this business is getting to name things.  The nice thing about option trends or patterns is there is always a new one.   Like the weather in Chicago (except for now), if you want it to change, just wait a couple of minutes.  Volatility conditions change all of the time, and now is a time for another one.

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Will Gold see IV lows next week?

One thing about low liquidity markets is that prices can get to interesting places with just a little bit of a push.  We saw that all week, as the volatility products got smacked around to close on the lows of the week, sans the weekend (see previous two posts).  That sure makes a rally more likely.  Enough on the volatility products, I want to talk about Gold.

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Is the VXX showing the way?

The Bill Murray movie Groundhog Day was one of my favorites.  What I liked most about his difficult situation is that he made it better by becoming better at things, playing the piano, learning a language, and becoming an all around swell guy.  As equity option traders the thing we like most is pattern and repeatability.  Traders see something that they have seen before and something clicks in their head and they put the position on.  If all goes according to plan, just unwind the winner.

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