option education

Can’t mine Bitcoin? Buy the shovels.

When I first walked onto a trading floor in 1989 the big thing was airline takeovers.  They were the hot stocks of the day and even DJT got in the action with making a bid for American Airlines.  Since then I have seen biotech, nanotech, tech, internet, 3d, emerging markets, etc, etc…. as the latest hot thing. You know when something is hot when a company goes public on the just the idea that they are going into an industry.  A mini-bubble can happen within a bull market and can come and go with barely a ripple.  Now we have Bitcoin (BTC).

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How do I trade this VIX?

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.

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TEVA is in the basement and it is spooky there

2600 looms large.  We discussed some trade ideas in our Gold Lab today and as much as I love some downside put spreads I can‘t help but think 2600 is soon.  As we roll into the close VIX could not hold the 10 handle and the  VIX futures could barely keep their tiny gains.  Maybe 2600 by Friday since rallying is really all we do.

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GE trades $20, now what?

With all noise on taxes the slide in GE is quietly going under the rug.  Just last week I wrote here it would be more sensible to price GE at $20 on a reduced dividend.  GE is cratering on a downgrade now of all things before the big dividend cut.  Downgrade it at $35, but at $20?  Many don’t think the yield can hold at the near 5% level.  If it does get cut, we should see lower prices.

 

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Trading Gold

Tech is still where it’s at with most of the big names reporting earnings beats.  Even lowly TWTR managed to squeak out a big move up now that profitability looks much more likely.  Long term IV is still cheap in there.  Evaluating volatility and position structure is a learned skill and that is what we teach in our Gold Course.

The Trade

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Will Super Mario save the day?

For a few moments today VIX went backward and traders decided to worry about a tax plan, ECB rate hikes, FANG earnings and whatever else ails a screaming stock market all at once.  I don’t see many backward to VIX cash markets at 13 VIX but we had one today.  Usually VIX traders have a reason to let VIX cash fly.

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Will GE do it or not?

Not so quietly GE has fallen from the low 30’s into the low 20’s with SPX and INDU making all-time highs.  Massive asset sales could be on the block and the equally massive 4.4% TTM dividend could be on the block too.  I think most of the weakness in GE is centered on those issues.  Option Pit is giving a free credit spread webinar tonight so this is an inkling of that.  And no GE will not be the topic.

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VIX future premium is too skinny

      

Any down day in a week for the SPX that does not see many is significant for VIX.  Not that VIX moves a ton yet but for what it sets up going forward.  For VIX traders VIX should go up when SPX drops but this is really not a big move on a percentage basis for SPX.  After all, the move was less than .50% for SPX but a full 1 point pop in VIX.  Even in low vol the VIX cash moved seem a bit rosey.

 

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