I agree with the consus and believe that in the end, the Scotts will do the right thing and vote to stay in the UK. That being said, I think the market might have discounted that result a little too much. Take a look at the SPX strangle that expires on the opening print tomorrow:
So the Fed is leaning toward 2015 to start raising rates? There is not much different in that announcement as the Fed watchers look to parse all the of the twists and turns in the FOMC meeting minutes. I think that after this long in our plodding recovery market players would be happy to see the Fed exiting. That means things should be getting better, but that is just me.
The VIX got creamed today as traders realized that the Fed is probably not going to be that big of a deal. Additionally, if the Scotts do what they should do, the VIX is probably going to go even lower. Looking accross the board IV got creamed in the SPX, NDX and DJX. It did not get smoked in the RUT which was the big underpeformer on the way up. Those that follow RUT know that underperformance is unlikely to last and that the index will POP higher if the SPX stays high (which it probably will). Thus, I think there mgiht be some real oppotunity to sell premium in RUT. Take a look at the price action of the RVX vs the VIX today:
Today, while the S&P was mostly unchanged, the VIX was up more than .80. When taking into account for weekend effect a little better than unchanged. Yet in many respects it should have been absolutely destroyed by the market. Why? Well take a look at where movement has been, in and out of meetings, in and out of economic announcements, and wars. Yet for some reason this Fed meeting is being treated as if there is some fundamental change occuring. Take a look at the HV/IV spread:
The news is out Apple is going to have the I-Phone 6 AND the I-Phone 6 PLUS!!! Plus APPLE PAY and the I-Watch. Based on what the stock did, the market acted to the AAPL conference much like McKayla Maroney would to a Silver Medal. With that the VXAPL got smoked. Even more so, the VIX options expiring this week and next week took it in the chin. That being said, it appears the market is still holding out hope for some more movement here is a chart of VXAPL:
I spent a little time looking at VIX vol today. I have to say, it is about as low as it gets...but could go even lower. Take a look at how much HV has plumpted in VIX over the last few weeks. But, taking a look at 30 DAY HV, it is possible things could get worse.
NFP sucked. The numbers were not great, but surprise, surprise the SPX ended the day up near another record. The law, in case traders have not been paying attention, is that low interest rates have been good for stocks. The ECB is lowering rates so that must be good for US stocks. Ok, anything that happens is good for equities. The bears might be right eventually if there is anything left of their PA’s when we finally crash.