Besides the Weekly options, the VIX is the best new product in a long time since the SPX. It spawned a whole other class of ETF’s and made all the old time Cboe seat holders a few extra bucks. The Bitcoin future and options will be out soon which might outshine them all. But really I want to talk VIX today.
Yet we have another all-time high close for SPX with the outlook for equities very bright indeed. Not so much on the fixed income side which had a massive correction in the last two weeks. The story is in the IV and here they tell two different things. The volatility for volatility as measured by the UVXY is near 1 year lows. That is right with equities clocking in highs vol of vol is in the basement. This is how it should be.
We are only 3 months in but I think I found the trade of the year. No doubt the option charlatans out there will talk about this monster winner as the way to make things happen. Buy out of the money options in potential takeover stocks and walk away with untold riches. It is easy, right?
The IEA came out and said the bounce in oil was only temporary. That caught a lot of the oil market by surprise as many producers and drillers found new lows today. Now we are dealing with a short term, could be long term, gut in oil supplies as OPEC puts the squeeze on competitors. That was enough to foil the bank rally yesterday. The sell-off was half-hearted at best from a volatility point of view.
It looks like the Greek Drama happening overseas ended up being a comedy more than a tragedy. That is good for investors and good for the Greeks. We will revisit the issue in June but for now that looks like the only thing that was holding up implied volatility.
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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.
Well, like the Greek referendum in 2012, they came, they voted and stocks rallied. I am talking about the Crimean’s who don’t seem to want anything to do with the rest of Ukraine. How it all shakes out is a bit of a mystery, but some very select Ukrainians and Russians will not be able to go to their ATM machines anymore when they fly to London or New York. That message hit loud and clear as both Russian and US stocks rallied back a bit today.