option mentoring

Will the low realized volatility stay with us forever?

I like working at Option Pit with Mark Sebastian and I like our clients.  Well one it is fun, most of time, and we have great clients.   From time to time we get some solid observations from them.  That is another thing I like.  Having a different perspective from traders you have helped educate usually means some interesting stuff know the foundation is solid.  So I am giving one of our clients some props here for this one.  He  knows who he is.

Note that when realized volatility dips below 5% on a short term basis it usually does not stay there for too long.  I have 10 day RV down around 5.41%.  Right now the first 3 Weekly terms in the SPX are all below 9%.

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Volatility on a knife edge

Close but not quite there yet.  SPY traded 199.75 today as the 200 level hangs like the Sword of Damocles over the market.  Everything is feeling good and long equity positions are kicking butt.  In short living the good life like Damocles envisioned.  However, the sword is poised to drop if Janet Yellen cuts the horse hair on rates and down the market drops.  There is some weird tension on that tenuous horse hair of volatility.

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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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Candy Crush Saga got well… crushed but is it a sweet trade?

Stocks are shaking off just about everything at this point such as Iraq, Iran, Ukraine, Syria and of course that paradise on the Med, the Gaza Strip.  Slow growth in Europe, who cares.  WMT swamped in health care costs, take it up.  Volatility, well just sell the crap out of it.  VIX is now deep into the 12 handle and we might sniff 11% tomorrow.

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Rattling the Sabers

I started trading options as a floor trader in 1991 right about the same time as Gulf War 1.  The runup to the war was characterized by gloom, volatility and really weak stock prices.  I think the Dow was 2300 or so.  Not much has changed in the 24 years since then through several other political crises and GW2.  The one constant has been after the USA goes in and starts shooting, stocks rally and the VIX cracks.  Until today that is, or maybe.

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More fun in the Emerging Markets

 

I won’t call today a turnaround day but it was noteworthy for the selloff that wasn’t.  The 2 min ceasefire in the Gaza strip did not help.  The sideways motion in the Ukraine did not help.  The ok jobs report did get stocks back to even at one point but there is still some sadness in the air.

That sadness has helped propel volatility to 3 month highs in many areas.  The VXEEM is making a near term high this week even when there has not been a whole lot of movement in the EEM with the 20 day realized volatility just hitting the high 13s.

LivevolX (r) www.livevol.com

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From Russia with Love... redux

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The EU and USA are starting to hit Russia with some bigger sanctions now as the international community is pressing the Russian leadership to end the turmoil in the Ukraine.  Both bonds and VIX are rallying but the volatility futures are not really reacting too much near the end of the day.  While I think this is bad for Russia short term it is much better that this is finally happening now.

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Popping a Z

 

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Stocks looked ugly today after the weekend did not solve anything in either Gaza or the Ukraine.  The POTUS threatened unilateral action against the tax inversion meisters and that seemed to get things going on a dumpy note.  By midday all was forgotten.  The dream merger between to social media darlings did not hurt.

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YHOO is getting taken over, really?

 

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I am going to skip the double whammy of the VIX up, SPX up today.  Chalk that up to airplanes falling out of the sky and freaking folks out, which it should.  All those overseas tragedies add up when it comes to volatility.  I for one would like to see them end soon.

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