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More Dirty Bird


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My general rule trading TWTR is don’t get long without puts.  After learning the hard way on the 2015 trip from mid 30 to the low 14s in 2016 the only thing that kept it from being a disaster was rolling my put protection down.  The near takeout in Oct/Nov gave me an exit which I took.  Now here we sit around 17.09 with Jan IV in the 30 handle.  Noone cares for the Dirty Bird anymore.

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Oil vol is too cheap

With VIX grabbing all the headlines for lower volatility at the end of the year it is easier to forget about what help drive volatility at the beginning of the year, namely oil or the proxy USO.  Oil IV in the Jan cycle is around 27% which is a level not seen since USO had a 20 handle and is now trading 11.5.  It's as if the market decided oil can"t move .50 a day for a barrel.  That sounds too cheap given some of the recent movement.

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The vol is dead, long live the Fed

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The market for volatility, the VIX, got a one, two punch for the BOJ and the Fed. They basically said they will do things in the future. BOJ to target rates, possibly less QE and the Fed for a likely Dec and 2017 rate rise.  They bought time and they bought space to take out some of the lingering doubts about rates in the mid-term and certainly before the election.

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The market is on Quaaludes

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As I look at the underwhelming iPhone launch, and my phone, I keep thinking there is an app for everything.  There is an app for tides, sports, music and just about anything under the sun.  My problem is a I need an app to tell me what to do in a market on Quaaludes; lots of delusion and nothing going anywhere.  As there is an app for anything, there are positions for every market condition, even markets punch drunk with Fed indecsion and sound bites.

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Turning to Dust

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Stocks are staring at the 2200 SPX level and blinking.  Since there is no real impetus to drive things higher buyers are content to sit where they are and wait.  For some reason the Yellen at Jackson Hole speech is starting to take on meaning.  With a market lacking meaning anything is a reason to move us.  Gold and gold related names like the miners are getting hit hardest.

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MYL gets stung

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2015 gave us VRX and the corporate perp walk of the year as the CEO got grilled for jacking up the acquired drug prices.  Congress gave VRX the smear job and the stock lost 90% at the low earlier this year.  My blog of last week talked about VRX and yes it is time to buy juice in there again.  That is not my subject. Congress might have a new dog to beat and the name is MYL.

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VIX gets a smack

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So the Fed turns a bit hawkish and wants to raise rates.  There seems to be the opinion that this fall at some point rates will nudge up.  That has done nothing to dampen bonds and prices jumped again.  Since we are the only G7 country paying interest I guess higher rates make  US Gov bonds more attractive?  That also says something about volatility.

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