option trading

VIX futures the quicker picker upper

For a moment there I thought hell froze over as a bi-partisan plan for the AHCA might keep it running for two more years.  Keep buying the insurance companies I guess.  Today was such a snooze that I have to go observational.  NFLX was not enough to excite although 70% stock price gains this year are exciting enough.  Let’s talk VIX because it did something slightly not normal but normal today.

charts from VIXcentral.com

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The 3 day rule

The 3 day rule

No, I did not invent the 3 day rule, but I like it.  In the old days a stock that went up 3 days in a row was susceptible to a pullback.  The 90’s put the rule on hold and QE messed with it as well.  Basically it is the old tape readers logic that 3 days in one direction is not sustainable.  With equity prices it is not a bad swing run timing thing, but it works very well for volatility, QE be damned.

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NVDA to the moon and beyond

Not very long ago NVDA was a $30 stock.  Now that the world has caught on to the many uses of GPU’s NVDA is a $190 stock.  Citron hated it at $100 and that was $90 ago.  With earnings coming up the MOMO crowd will not be able to let NVDA go so I think there is reasonable support for the name.  The question is if I can make some upside cheap enough.

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Shut the door, VIX is up two days in a row

It happened! The streak of sub-10 closes is going to end for VIX today and I am not sure why.  Yeah we had some weekend effect and the morning rally in tech went kaput, but actual SPX move was pretty light.  I think this is the one time in IV where VIX rallied because traders were looking at the upside instead of the downside.  Sub-10 VIX is still pushing on a rope with vol expectation to go lower.

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VIX does it again!

 So you say, "what does VIX do again"?  It stayed below 9 for the 6th day in a row.  Mark did a hit on Mad Money describing this.  Realized vol is in the toilet so VIX should be low.  If VIX was rising solidly on  a rising SPX, usually that is a good time close the short vol positions.  We did have a slight up day in VIX today, .12, but I don’t think that is enough to reverse the trend.  ATM IV in the SPX is 6.68% so it is hard for VIX to get much lower.

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Is Catalan secession a problem for the Euro?

There was a time not too long ago where any hint of Euro disunity caused big ripples in the markets.  We had the Greek elections and debt crisis and MF Global blew out on what turned out to be a good bet long PIGS debt.  Spain is having a mini-crisis around the Catalan state leaving and US markets mostly shrugged.

 

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Sticky Sticky Sticky VIX

As we run to all-time highs for SPX and RUT plain kicking the door down, VIX notched in a 9 handle close.  All is normal, as the BIG VOL INDEX runs the way it is supposed to.  Now the issue really is why the VIX Oct future remains above 12  with less than 3 weeks to go.  The short answer is the future traders are holding out.  Waiting for the next DJT Tweet bomb or a NK dirt clod fight has left premium sellers a little shell shocked.  They won't give it up.

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QQQ the mess

Every weekend we are treated to a variety of Tweets designed to arouse some and infuriate others. The fearless leader of NK and the NFL came under fire within 24 hours of each other. So from a standard deviation perspective, you can't get much farther apart than those Tweets.  Maybe we call it 3 Sigma Tweeting in that they were so different the NFL issue almost blanked the NK issue over the weekend.  I don't think that is what upset the QQQ today.

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