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A new technical pattern emerges intraday- the VIX Grinder

No it is not a tasty sandwich from the Potbelly shop close to the CBOE.  It is a pattern we found in our chat room at the Option Pit.  Yeah, Yeah I know you will say it is a “wedge’ but pox on that.  It kind of reminds me of a sausage grinder.  Meat goes in and sausage gets spit out.  In fact one of our clients came up with that.  VIX kept grinding with the SPY and doing nothing really.

 

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Something is bubbling under the drillers

Stocks looked ok today until Spain announced they have a case of Ebola in the country. It sounds like a non sequitur but a panic could be bad for mining, airlines and a host of other industries that operate in Africa and transport goods and people.  Never mind that Ebola does not transfer from one person to another easily, but we are talking market sentiment here not rational behavior. 

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Our Founder on Bloomberg Callling Market Bottoms Talking TWTR, GPRO

Our Founder was on Bloomberg discussing why he saw a bottom in the market:

 

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VIX Saying Sell Off Over

While the S&P may have closed unchanged, the VIX was down on the day.  In fact, with the SPX down about 25 points over the last two days, the VIX is actually down .1 points.  Also down VVIX, VXST, basically all indexes that look at near term insurance prices.  Options were for sale today.  Take a look at the tick chart from the last two days.

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INTC IV Looking Big

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Another toxic brew for stocks today as equates drifted down around 1+% for the day.  None of this was really attributable to the numbers.  ADP was ok but the Ebola, HK, Russia, ISIS concoction of market sadness kept sentiment weak.  Note how all the problems are more political than anything else.  They need the will to solve them.  This did drive IV up to some higher levels so those with some dry powder listen up.

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Someone see the Camel that puked on the Euro

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Normally I would not do this.  At Option Pit we pride ourselves on coming up with our own trading ideas so this is a bit of an aberration.  Sure we use client ideas, but heck, they are our clients.  This is one that came up in our Pro Chat and it led to a decent trade idea so I am going to share.

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Is the new VIX level justified?

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It is possible we are back to the days when the NFP numbers mean something.  Stocks are more edgy lately as the intraday volatility picks up.  The 16 VIX right now is justified on the touchy moves over the last 4 or 5 sessions.  The bid for volatility today belies something else.  I see some unrest potenital from PIMCO but I do not think that is it.

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IV Blood Bath and Beyond

Bed Bath and Beyond had earnings on Wednesday and completely killed it.  The options were also killed in a complete bloodbath of option volatility (thus the catchy title).  However, I think this is the case of option traders getting a little overzealous in their attempts to sell premium.  Take a look at this chart of BBBY stock and BBBY 30 day IV.  What do you notice?

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VIX the Underperformer

The market had its biggest drop in months.  It below through the 50 DMA, and if things keep going it could threaten the 100 DMA if things keep going.  Today, on CNBC I am sure the anchors are panicked.  Yet,  the VIX was up less than 3 points at the end of the day, despite the SPX closing on the lows.  Why?  Take a look at this chart of the SPX, 30 day IV and 20 day HV.

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Mean Reversion Day

“Unlock The Secrets Of The Mysterious VIX…

And…Trade VIX ETPs Like The Pros!”  Sign up for our Free Webinar! Introduction to the VIX and VIX ETP's   Tonight!

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