Is Russian aid a Trojan horse?

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We all know the story.  Troy is finally sacked by the gift of an enemy-impregnated horse the size of a house.  Browsing through the WSJ online I see an an Orthodox Priest blessing a fleet of aid trucks.  I half think there might be some Spetsnaz Commandos lying in wait in those bad boys.  With the gimpy stock market today I am not the only one.  I am all for Putin giving aid to the hungry but it is still tough to believe.

I lead off with the geopolitical because that is what is driving volatility.  The government is bringing in record revenue (spending issues anyone?) and most other economic indicators point to raising rates in 2015.  That is sounding like some positive activtiy as the economy can produce revenue and demand for dollars.  Still it is the geopolitical issues driving stocks today and all of the global loose ends that have unraveled in the last few weeks.  What does the vol. curve say today?

3D charts from OptionVision 

At the money vol. in the SPY is declining.  Upside volatility is rising slightly and this is normal skew activity if traders think we are going to ….. Bounce!  Yes the word is bounce.  As listless as things are the upside is just a bit more expensive today than it was yesterday.   That says a little bounce.  Maybe those trucks are full of vodka and caviar after all.

The Trade

The SPY Aug 22 Weekly upside broken wing butterflies can be had for small credits.  They could be worth some decent money by next week.

Disclosure: Index positions

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