option trading

Can the VXX hold 26?

Posted by atg on Wed, 02/01/2012 - 5:29pm
Getting to a number in stocks and indexes is important: AAPL at $500 (oh sorry, not yet there, but are there doubts?), the Dow when it first crossed 10,000 (the second and third time not as fun), and the VIX below $20.  When the VIX is below 20, the market is entering a lower volatility environment, and fund managers get to rejoice again as they try to beat the S&P 500 up.  That is a far cry from the opportunities in the 4th quarter of 2011.  The step sister of the VIX is the VXX ETN, which is made up of the front two VIX future months.  We watch it pretty closely at Option Pit in Option Pit Live.  It is a nice trading product.  What I am waiting for is a close and drop below $26.  Why you ask?

AAPL Options Implied Volatility in the Toilet

Posted by msebastian on Mon, 01/30/2012 - 4:13pm
It is somewhat common knowledge that I continue to be a seller of option premiums right now.  However, that doesn’t mean that traders should be selling all option premiums.  There are a few tech names where the implied volatilities have been crushed to levels that we have not seen in some time.  Take AAPL for instance:  30 day option implied volatility is at two year lows: LiveVol (R) www.livevol.com

Netflix is streaming to a TV near you

Posted by atg on Thu, 01/26/2012 - 7:25pm
The 4th quarter of 2011 is now viewed as the quarter of "the big growth momentum earnings wreck syndrome".   The big names like AAPL, NFLX and GMCR took it on the chin. So did much of the market as I recall, but I digress.   At least for the first two names for this earnings cycle that is not the case in the sunny land of 2012 (no problems fixed and the credit you want).   I am going to focus on NFLX for now, because I think the reason for the move is much different than AAPL’s, and there is a more interesting trade in there.

The Underrated Move by the ECB

Posted by atg on Fri, 01/20/2012 - 6:05pm
In my short stint as a floor clerk (Ronald Reagan just left the White House), I learned an early lesson in liquidity.  One of the partners in the firm I worked for would use low liquidity as a partial definition of a Bear Market.  Sitting on a trading floor, clerking for a trader who was watching the paint dry was a visceral experience.  Watching every equity bid hit in the move up to Gulf War I (Dow around 2300), I could feel no one wanted to do anything.  Usually, in a liquid market, there is action between the bid and offer.  Not so for that stretch in 1990.  No trader would give a floor broker a break filling paper because of the dread overhang of uncertainty with the Iraq invasion. 

Are the US Equity markets still connected to the Euro mess?

Posted by atg on Fri, 01/13/2012 - 7:08pm
Are the US Equity markets still connected to the Euro mess? Last year was really two different years rolled into one.  There was the Go Go equity climate till late June (NFLX $250 bid anyone?), and then Congress ruined it by passing the buck on a historic deficit reduction package.  I still think the market was looking for some leadership and ended up with zip.  Anyone with an electronic device knows what happened then, as the VIX became the most quoted index in the land.  The European Do Nothings joined their US counterparts, and the fire was lit.

Setting up for 2012

Posted by atg on Fri, 12/30/2011 - 4:09pm
Setting up for 2012   As we get ready for the New Year at Option Pit I thought it would be nice to get traders in the mode by setting up their calendars (the real thing, not the spreads) and touch on some issues for 2012.  First off go to the CBOE website and download the 2012 Expiration Calendar (http://www.cboe.com/AboutCBOE/xcal2012.pdf).  To understand how option products work you need to know the expiration cycle and how and when they expire.  I have a small inset here of the Jan Cycle from the CBOE calendar:

The JEF indicator

Posted by atg on Sat, 12/03/2011 - 7:36am
First some business, Option Pit has TOTALLY revamped much of our programming.  The new programming is designed to deliver

Are AAPL options cheap enough to buy?

Posted by atg on Thu, 12/01/2011 - 7:01pm
First some business, Option Pit has TOTALLY revamped much of our programming.  The new programming is designed to deliver

AAPL Iron Butterfly Might Be Interesting

Posted by msebastian on Wed, 11/02/2011 - 10:35pm
As I looked at AAPL on LiveVolPro today, I noticed something interesting.  It was a possible split strike butterfly play.