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FXE Vol Pointing Toward a Move

Over the last 6 months I am not sure if there has been a product that has seens its IV get smooshed more than that FXE.  However, in the last few weeks, all that has begun to change.  Euro Currency  is starting to move and ahead of tomorrow's meeting of the ECB the market is actually expecting some sort of pick up in movement either tomorrow or over the next few weeks.  Take a look at a chart of the EVZ (the VIX of EVZ)

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Livevol (R) www.livevol.com

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AAPL stock split is gamma-licious!!!!!!!!!!!!!!

The big news right now is that AAPL did not announce any new hardware.  There are hints and the developers like the new software, but the bread and butter of hardware is still not announced yet.  That makes this conference a little different in that AAPL has held up pretty well after the big rally going forward.  How it reacts next week is anyone’s guess.

To a large extent that will have to do with how paper treats the new AAPL stock around $90 bucks a share.  I know the intrinsic value of AAPL is not changing but those smaller stock prices could bring back in the mom and pop players who were unfazed by the mini options.

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VIX is well priced for now

As I write this the AAPL WWDC is going full tilt and the stock has not been able to hold up for most of the day.  Granted it had a near $40 run up last week, $606 to $642, so a pullback is not out of the cards.  That run also helped push the SPX to record highs on not the greatest news in the world.  Part of that run is helping to damp down the volatility a bit in the big indexes of which AAPL is a part.

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A Chip in the old BLOX

 

 Stocks moved sideways again yet found a way to make a new all-time high in the SPX.  Not every stock was so lucky.  Take Infoblox Inc (BLOX) for instance.  BLOX came up on a volume screen and spent a good part of the day in the basement.   For a stock that traded near $50 this year the fall was humbling.

3D charts by OptionVision and ORATS

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Vol of Vol bottoming out?

I am fresh from a webinar for TradeMonster entitled “Trading in a Low Volatility Environment”.  It was good to have so many questions about the alternative trade setups.  The big takeaway of course is that a trade set up when vol is cheap has a certain character.  With the VIX staying comfortably below the 12 handle we certainly are that.  The surprise of course is the economy can contract and we rally to all-time highs.  I guess paper wanted to buy the recession dip due to the bad weather.  From what I can tell global cooling is a lot worse on the economy than global warming but good for stocks.

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RUT-SPX Vol Spread Getting Wider

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First, it was the vol of the NDX over SPX  that collapsed.  Now, it's RUT vol over SPX.  The spread between SPX and RUT vol is getting REALLY wide.

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9 is the new 10

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Looking at the market rip up on the surprising housing news and the old highs are in the rearview mirror as stocks race ahead.  Alex Jacobson, who I co-moderate the Options Block with on the Options Insider Radio Network, made a nice call last week watching the Dow transports make new highs and thinking the broader market was not too far behind.  1909 on the SPX and counting today as the shorts are going to have a hard time answering on this one.

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Looking for bargains in a non-bargain market

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Cage match in the NDX

Stocks briefly flirted with new highs today, but look like they will close up for the day.  Slightly better housing news with a non-reaction to Thailand or Ukrainian violence also got the VIX to a 12 close.  I am not saying stocks can't drop, but the case for up to flat is getting better.  Part of the VIX is to forecast volatility in the future and for now there isn't any.

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SPY IV is getting hit hard as Memorial Day is celebrated a bit early

The Fed whispered it is looking at raising rates and we rallied.  Why?  Because higher rates mean economic growth and that is ususally good for stocks.  The question is really more out into 2015 but still the Fed mandarins are kicking it around and we rallied.  VIX got hit.  IV got hit.  Stocks felt the love with another run at a record probably a day or two away.

Stocks love certainty and a path for rates makes investors believe that things can get better.  We already highlighted the crazy term structure yestery in VXX and it is happening in SPY today.  The difference is that we are coming into the holiday and the liquidity providers are taking out the 3 day weekend faster than the US Army can take over Iraq.

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