implied volatility

Buy the rumor and sell the BABA

  Boot Camp is coming in Dec!  Stay tuned.

Stocks are struggling today to make it to another record for the S&P 500.  As of right now a little push at the end of the day should do it.  Without anything news worthy I don’t expect stocks to do a whole lot.  A stock that has been doing a lot is BABA.

Alibaba Group Holdings, BABA has been on a tear since mid-October as it held up better than just about everything else with the stuff hit the fan not too long ago.  Chinese equities have done ok since then but nothing like BABA. Yesterday was the big Singles Day retail extravaganza and BABA pulled in more of their share.

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Something is bubbling under the drillers

Stocks looked ok today until Spain announced they have a case of Ebola in the country. It sounds like a non sequitur but a panic could be bad for mining, airlines and a host of other industries that operate in Africa and transport goods and people.  Never mind that Ebola does not transfer from one person to another easily, but we are talking market sentiment here not rational behavior. 

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Someone see the Camel that puked on the Euro

 Sign up for our Volatility Event on Oct 4th  here.

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.

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Mean Reversion Day

“Unlock The Secrets Of The Mysterious VIX…

And…Trade VIX ETPs Like The Pros!”  Sign up for our Free Webinar! Introduction to the VIX and VIX ETP's   Tonight!

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VIX Realized Vol about as Low As It Gets

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.

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LivevolX (r) www.livevol.com

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Is there a second take in TTWO?

Stocks are going to make a closing high today or near it as I write this post and I can’t help but think we would be way higher if Vladimir Putin could make up his mind what he wants to do in the Ukraine.  We know what he wants to do, take a bunch of territory, but the Europeans are still threatening sanctions.  That is keeping the VIX into another elevated close and vol. futures bid.

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VIX term structure is getting cheap

Another day another rally in the good old USA as America Inc. keeps delivering the goods.  More solid earnings and home start data got us off to another good start today.  Market players are waiting on Yellen to report some lower to stabile rate news, which could  send stocks even higher.  I see that 200 number on the SPY and can’t help but think that is the next round number to cross the line.


charts from : http://www.vixcentral.com/

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LNKD volatility is cheap

Yet another rally on no bad news as stocks love the lack of action overseas.  That was kind of a mouthful.  There is no doubt that the gravity is pulling stocks up overall.  The rally to all-time highs in the face of overseas unrest is just another reason to believe in the rally.  Another reason to believe is the lack of a bid in IV.  The VIX cannot hold a bid for anything even as a near panic hit volatility of Friday morning.  By the end of today it was all forgotten.

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MU Call ITM Buying

Sometimes customers do really weird things.  Sometimes its because they have a strange stock position.  Sometimes its because they ahve been given bad advice by a cruddy broker.  There are cases where the customer just has a strange idea on how to trade or has no idea how to trade.  To be honest I do not know what this customer is doing in MU.  Check out the volume and open interest in MU ITM call options in september.

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Livevolpro (R) www.livevol.com

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Is the FB vega too cheap?

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After a weekend of non-activity stocks got back to their old ways and launched this morning without so much as a how do you do.  This latest Euro issue has been around since December apparently and Euro bank stocks were already trading at lower levels.  Either way VIX and the volatility futures are tanking today and the only thing holding up the IV is the balance of earnings.

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