option trading

GOOG volatility is too cheap into earnings

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GOOG is about to declare earnings and this is the cheapest I have seen the ATM options in as long as I can remember into a cycle.  The key to GOOG is how it trades through the earnings.  Most of the time the move in a direction will keep going allowing the  ATM the day before earnings to go deep in the  money.

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Learning to love a Cruddy financial Product - VXX

So the Fed came out today with the ball of confusion.   Some want to raise and some do not. That is fair enough and I am starting to feel like the FOMC manages these messages to such a degree that not umbrage can be taken any party.   They want things to be smooth.  Since the Fed has more money than everybody else they will win.

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Volatility Orbits

Market volatility took a bit of a ride today as the pre-open smack led to, what else, a rally.  We got some Fed Governor news on blaming the winter but I feel like the lame jobs report was set up on Wednesday’s ADP number.  $50 per barrel oil is not creating any jobs in that sector either.  The pre-open action lately has not been a very good indicator of what is going to happen during the trading day.

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Trade of the Year

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?

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Embrace the SPX schizophrenia

We open this morning with another launch of .5 to .7% depending on where things get to.  I thought last week that 2015 was the year of the Iron Condor in the big indexes because there is lots of daily volatility but not really a follow through in any particular direction. That still looks to be the case. Mostly we have trading ranges that resemble a tempest in a teapot.  The Fed keeping things steady (Mark called that several times over the last few weeks) puts another sword into the volatility.

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NFLX has competition

We have another day like last week where the rally came from nowhere and is most likely not going to go anywhere.  It feels like the algo driven market catches any new piece of news about the FOMC release and it is off to the races.  The last 6 months has been about macro freight trains, collapse of the Euro, oil and commodity  prices with a rocketing dollar.  Greece isn’t even in the headlines anymore.  As day went most stocks were up and VIX softened a bit before the Wednesday’s release.

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So NFP was a big deal!

Surprise, surprise as stocks took a bit of a header today, on get this, a great jobs number.  Yes the number was too good and now interest rates look like they could go up after all.  The Euro and gold responded in kind by plunging to lows of 2015.  Bonds took out some lows for 2015 too. 

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NFP is NBD

 

If January was the month or realized volatility March is turning out to be the dud central for realized volatility.  HV 10 is clocking in around 5% so stocks are barely able to make move from close to close.  The skew is pretty steep keeping VIX higher but for the most part ATM volatility is low.  30 Day IV  is in the 11 handle ATM so there has not been a total collapse but it is getting there.

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Is the oil patch finding a bottom?

This was a strange day in the market when stocks really lacked a sense of direction.  For the most part the tone was down and VIX was up slightly but the volatility futures actually finished down on the day into the close.  There was really a lack of interest more than anything else as the race to NASDAQ 5000 left everyone with an empty feeling.

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Sticky VIX

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VIX is having bouts of self-doubt about halfway through the day the last couple of days.  The 13 handle is acting like kryptonite which repels all VIX declines.  The SPX is in such lofty territory that any pullback is taken as a sign of worry.

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