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.
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.
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.
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.
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?
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.