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:
Boeing continues to rally ahead of an important NTSB decision on the safety of its battery system within its new 787 Dreamliner, but why? Considering BA is nearing an all-time high, it seems likely the market has already “baked in” the idea that the NTSB will eventually approve the system.
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:
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
Lets pull up a 1 year chart of VIX. On the top are the levels of VIX and on the bottom is call and put volume. I thought it would be interesting to look at past volume spikes to see if they are a potential leading indicator.
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 Office around the end of the 19th century, “Everything that can be invented has been invented,” he opined in ….1898.” Well he was a little bit off and while the CE
We had a pretty listless day today. VIX down with the SPX down is usually a snoozer, as the market takes a break and evaluates what volatility is really worth now that the printing presses are going full steam. That moisture you feel in air is the strain of the dollar machine blowing steamy exhaust out of the building. I guess the Euro theater is now just a spectator sport as the two sides decide what to give and how much to want. Either way the central banks have committed to throw money at it so the VIX is looking iffy at a 14.18 close.
A lot of traders that are new to options have to first deal with the number of moving parts in an option contract (mainly, why we put together the Silver Course) and all the permutations that fall from it. One of the first things that come to mind is when a call is assigned and becomes stock (this happened to one of our students yesterday). First, there is a call and now there is stock. What to do?