Yet we have another FOMC announcement with the Fed choosing to do nothing. I don’t know how far the economy has to grow before rates start to normalize but we have to be getting close now. We had the 90’s and a government surplus and higher rates and no one was complaining. Once again post-meeting the VIX dropped even with near sure 25 basis point rises in 2015 mapped out.
As long as one of the big 4 (EU, Japan, USA or China) is still in the QE way stocks are bound to tumble on good economic news. USA is out, China thinking and Japan and the EU are in full swing. Today the EU is reaping the benefits of tough fiscal policy and looser monetary policy with growth looking better so stocks sold off. The strange result of QE is that good news is bad news for stocks and that is the present reality. To the extent this small selloff lasts will probably be answered by the ADP number in the morning. We will probably bounce on a middling number.
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One of the most followed stocks on the NASDAQ, FB, had earnings last night. There was HUGE volume yesterday ahead of earnings and May3 weekly volatility got to 150% ATM. FB actually made a decent move by the end of the day today, moving up to near 29.00 a share. But, those who bought upside calls are probably NOT happy. Take a look at a shot of the FB May3 29 calls from yesterday.
Our COO was on Bloomberg TV discussing BA option trading ahead of an upcoming NTSB decision on the 787 Battery. You can watch the video here:
The entire Consumer Cyclical sector is killing right now. PG, CL, CLX and KMB are all at or near all-time high stock prices. The industry is doing great as a whole; KMB in particular has had a great run higher. Yet, something a little screwy is happening with Option IV in KMB. Take a look at the 30 day IV from LiveVolPro of CL, CLX, KMB, and PG. KMB is the green line:
Livevol (R) www.livevol.com
As Bill Luby reported on his blog VIXandMore. VIX option volume and call volume both set records today. Which leads us to this question? Why? There are two potential answers:
1. The Market is about to tank and smart money is covering their butt
2. The large stock funds are scared, and hedging their portfolio's
I liked the special title there for our blog tonight. For the most part the activity in the volatility markets was pretty muted today. On balance some decent earnings but nothing to light a candle under the big indexes. The NDX was up about .33% so the CES show was not exactly lighting a candle under the technology stocks. I was reading a column in the WSJ not so long ago that the next technology innovations won’t be enough to spur economic growth or some sort of nonsense like that. Some professor was espousing this idea and it reminds me of a quote from the head of the US Patent Offic