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Stocks are bending but not broken yet

Thankfully you are not a Russian IRA holder right now.  Normally when the USA invades stocks are in a state of suspended animation and then they pop. Historically that is what happens.  If the Russians invade Ukraine I am not so sure the same thing will happen.  The RSX will probably sell off another 2 or 3% easy.  Stocks here will sit in limbo to slightly lower.  We have recent history of the RSX and SPY to confirm that.

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VIX Not Fully Vested in Rally

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While I do agree that there is little predictive value in the VIX on its own,  two things that I do think have some predictive qualtites are the relative performance of VIX relative to the SPX and VIX term structure.  The one I want to concentrate on today is term structure.

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More fun in the Emerging Markets

 

I won’t call today a turnaround day but it was noteworthy for the selloff that wasn’t.  The 2 min ceasefire in the Gaza strip did not help.  The sideways motion in the Ukraine did not help.  The ok jobs report did get stocks back to even at one point but there is still some sadness in the air.

That sadness has helped propel volatility to 3 month highs in many areas.  The VXEEM is making a near term high this week even when there has not been a whole lot of movement in the EEM with the 20 day realized volatility just hitting the high 13s.

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VIX and VIX Futures Could Break Coorelation

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).

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We're Going to Need a Bigger Blog.....SHARKENDAR SPREAD!

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.

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From Russia with Love... redux

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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.

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Popping a Z

 

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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.

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MU Call ITM Buying

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.

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YHOO is getting taken over, really?

 

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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.

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Where the vol is

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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.

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