Posts Tagged ‘VIX’

VIX Call Spreads Trade

The CBOE Vix Index topped 17.0 and the highest level since early-August on Monday morning amid declines in U.S. equities to start the trading week. The volatility index is off its earlier highs to trade 5.0% higher on the session at 15.65 as of 11:30 am ET. Options volume on the VIX is hovering near 360,000 contracts, or just more than 50% of the average daily reading of around 660,000 contracts. Calls are far more active than put options, as evidenced by the call/put ratio up above 4.2 in morning trading, perhaps as some traders position for volatility to stick around.

Large call spreads traded on the VIX today caught our attention as one big options market participant appears to be rolling a bull call spread from the October to November expiration. A 45,000-lot Oct 19.0/23.0 call spread appears to have been sold, while the November 17/23 call spread appears to have been purchased, all at a net premium of $0.57 per contract. The spread looks for volatility to potentially rise to the highest levels since December 2012 when the VIX touched a two-year high of 23.23. The chart below marks the 17.0 and 23.0 levels (dashed lines), the striking prices selected in the Nov 17.0/23.0 bull call spread.

Chart – 2-year chart of CBOE Vix Index


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Big Prints In VIX Calls

The CBOE Vix Index is in positive territory on Friday morning as shares in the S&P 500 Index move slightly lower. Currently the VIX is up roughly 2.75% on the session at 13.16 as of 11:35 am ET. Earlier in the session big prints in October expiry call options caught our attention as one large options market participants appears to have purchased roughly 106,000 of the Oct 22.0 strike calls for a premium of around $0.45 each. The VIX has not topped 22.0 since the end of 2012, but it would not take such a dramatic move in the spot index in order to lift premium on the contracts. The far out-of-the-money calls would likely increase in value in the event that S&P500 Index stocks slip in the near term. The VIX traded up to a 52-week high of 21.48 back in February. Next week’s release of the FOMC meeting minutes from August could give rise to increased volatility in U.S. equities. If you recall, the VIX spiked to approximately 17.5 on August 1st amid concerns over geopolitical risk that sent market participants scrambling for protection as stocks slumped.

Chart – One-year chart of CBOE Vix Index


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Will We Hold It Wednesday – S&P 1,440 Edition – Again

SPY WEEKLY 1,440 – Again.

That's right, we have made not one inch of progress since we had the same exact title in last Wednesday's post, when I said: "This is the part where the MSM begins to realize that Manufacturing is slowing down, stimulus won't create jobs, earnings are not going to be as good as expected, Europe is not fixed, housing is not as strong as expected andthe stock market is being manipulated.  Yep, all the stuff I've been telling you for months."  Our plan was to buy into the dip and that's what we've been doing the past week as our short-term virtual portfolios are now much more bullish than they were a week ago.  

As you can see from Dave Fry's weekly SPY chart, we're still in an uptrending channel and still over the major support line at 1,420 and we tested 1,430 at the end of last week but have, so far, held 1,440 this week.  

Last week we were all worried about Spain because they were rioting in the streets and this week we are all worried about Spain because they haven't requested a bail-out yet.  "Plus ca change, plus c'est la meme chose," as they say in the country next to Spain…

USO WEEKLY In Member Chat last Wednesday, we took advantage of Oil Futures (/CL) testing $90 to go long and by the end of the week it was back to where we liked to short it at $93 and this morning, ahead of inventories, oil is at $91.22 but we're not long today as we don't expect the bulls to have much to get excited about but, if we get a dip to $88.50 that holds – we'd like to go long there.  As you can see from this USO chart – we're pretty well stuck in the channel but the bottom is about $89 so I'm thinking a build this morning takes us just below the $33 line on USO

AAPL was at $666 last Wednesday and they closed at $665 yesterday but we've worked ourselves into a more bullish position there (we had several long-term bullish trade ideas on AAPL in Member Chat that day).  XLF was holding $15.50 and we went longer there – now $15.69.  We added QQQ Oct $70s at .30 and yesterday we had the chance to add them again…
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Thursday Thoughts – To QE or Not to QE? That’s a Trillion Dollar Question

Now we have dueling Fed heads weighing in on QE talk.  

CNBC interviewed both Boston's Rosengren (dove), who said not only is QE necessary but that "it needs to be substantial enough that it off sets some of the shocks that we're getting from abroad and some of the concerns that people have with how weak the world economy has been – so we're in a Global slow-down."   Isn't that great?  He thinks the Global economy is TERRIBLE and that means we should rush out and pay 5-year highs for equities, right?  What a silly market we have.

Then CNBC brings on Richard Fisher, who said additional stimulus would have little impact, as we're already at 0.25% and that's clearly not helping and that additional Fed stimulus now would look political and it's the US lawmakers, not the Fed, that need to "get their act together" if they want to stimulate the economy.  Elsewhere, Fisher was backed up by KC's Esther George, who said that, at $3Tn on the balance sheet already, the Fed is only buying a future crisis when it comes time to unload these assets on a market that is ill-prepared to absorb them.  “It’s always easy to buy,” George said. “We’ve never had to go back into the market to sell this quantity of assets.  

Gosh that makes sense! 

She said the Fed’s bond holdings further would create a “steeper hill” once policy starts to shift in the face of a stronger recovery.  Add to that the burden imposed on savers, George said, and the pressure on pension funds, banks and insurance companies to take investment risks they normally wouldn’t take to earn a bit of income.  

She said she didn’t know how Europe’s struggle to save its common currency, the euro, would come out. “Either way they go, the results are going to be dramatic and will be painful,” she said. “I see no short-term solution.” 

The drought is likely to drive up food prices globally, if not this year then next, she said. George also noted that rising prices for food, energy and apparel were particularly hard on low-income Americans because those essentials accounted for a relatively large portion of their spending. "We know inflation can move quickly, and we’ll have to watch for
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Friday Fake Out – The Bear Trap is Sprung!

Oh you people are such suckers!

You panic out of positions at rock bottom prices and you'll sit there like a deer in the headlights when we bounce back until we're already too high again and then you'll chase the top – only becoming fully invested after we've already exited.  Don't blame me – I try to warn you, but no one listens to me.  

This morning the markets are in full panic more and that's fine with us as not only are we still "Cashy and Cautious" but what did we tell you Wednesday morning?  "TZA July $19/25 bull call spread at $1.50, selling $18 puts for $1.05 for net .45" along with EDZ at $17.23 and SQQQ at $51.80.  SQQQ is at $53.79 (up 3.8%) and EDZ is $17.90 (up 3.9% and the TZA hedge is already at net .80, which is up 77% in just two days (so far) – now that's a hedge!   When you have your hedges in place, THEN you can bottom fish with impunity and boy is the fishing good out there!  

Today we get our Non-Farm Payroll numbers and there's a rumor out there that it's a big miss at 120,000 or lower.  CNBC has been pretty much reporting it as a fact all morning and Europe is freaking out for that and many other reasons so I had occasion to look back at last month's NFP report, where we predicted it would be a miss with the the title:  "The Blow Jobs Deal to the Market Could be Huge."  That was 10% ago on our indexes are back to testing last week's lows, where we began to get bullish with our Twice in a Lifetime List of stocks that are back at their 2009 panic lows which we still like enough to sell puts in (giving us an additional 15-20% discount on initial entry).  

That post capped off a week of bearish picks as we followed through with our plan to cash out into the April rally – it's those bearish profits we're now GAMBLING with as we bottom fish but, as noted above – we're hedging our bullish bets because there's no limit to how badly investors can freak out in the stock market – CASH remains KING!

A quick review of the week leading up to the last NFP report is a nice view of
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Will We Hold It Wednesday – Euro $1.24 Edition

If it wasn't for bad news, Europe would have no news at all.

The funniest thing about watching Europe implode in a sea of incompetence is that we're actually no different over here – it's just not our time yet.  That doesn't stop the punditocracy from pontificating on all the ills of the European Union, as if America will be immune to California as their economy ($361Bn in debt) slips into the ocean

Actually Greece is not the disaster du jour in Europe this morning – it's Spain (who were downgraded yesterday), whose junk-rated 10-year notes are now costing them 6.65% – back to pre-LTRO levels already, after just 90 days of being "cured."  Italy is right behind them, only able to sell 90% of the bonds they auctioned off and even those went for 5.66% on the 5-year notes and 6.03% on the 10-years.  

Meanwhile, German yields hit record lows at 1.318% so how, exactly, does it benefit Germany to "fix" this situation when the fix would be for Germany to go back to paying 3% while Spain and Italy go back to paying 4%?  It's not like Spain or Italy will ever be able to pay back the money anyway so all we're really doing is costing Germany money to PRETEND things are fixed – again.  When will this madness end?  

Extending and pretending is exactly what is being planned as the European Commission is prepared to as European Union finance ministers to give Spain an additional year to meet the budget deficit target of 3%, according to a report in the online edition of El Pais this morning. The newspaper said it had obtained a rough draft of the copy of the economic strategy for the euro zone set to be delivered by the Commission on Wednesday. Media reports said it will issue specific recommendations for each of the 27 countries. El Pais said the EC wants to give Spain until 2014 to reach the budget deficit target of 3%, in light of its economic problems, but will also include draft recommendations on pensions, the financial system, taxes and labor reforms.  

SPY DAILYThank goodness – that will fix everything, I'm sure!  

Meanwhile, on the US side, we're getting worry fatigue and we're ready to rally – as was made clear by yesterday's bullish action which took us over our
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Friday Follies – Come and See the Show!

SPY 5 MINUTE

Welcome back my friends to the show that never ends We're so glad you could attend 

Come inside! Come inside!

There behind a glass is a real blade of grass

Be careful as you pass.  

Move along! Move along!

Come inside, the show's about to start

Guaranteed to blow your head apart

Rest assured you'll get your money's worth

The greatest show in Heaven, Hell or Earth. – ELP

What a long, strange week it's been in the markets.  

I know we've been having fun.  See that turn in the S&P at 2:35?  My 2:46 comment to Members in Chat was:  

$25KP/StJ – Keep in mind it's an aggressive portfolio BUT, in the $5KP, we're going to take $1.80 and run for the DIA $127 puts on the whole thing and 1/2 out in the $25KP.

That's two days in a row we nailed the turn almost to the minute (Wednesday it was USO) and those $127 puts cashed out with a 50% profit in 2 days (we picked them up on the 17th).  I put it to you – are we simply amazingly good at picking tops and bottoms or is the market, in fact, a total scam and we just happen to be good at identifying criminal patterns of behavior? 

Since our premise for making these calls is that the market is a scam and since I said just yesterday morning "Every morning we have a pump job to short into and every afternoon there is a BS stick-save to re-establish our shorts" – you have to at least consider the possibility that the markets are, in fact, fixed.  

So it should come as no surprise that our ultra low-volume Futures are back up this morning with oil once again giving us an entry at our $103.50 shorting spot (see yesterday's post).  We caught a $1,300 per contract ride down to $102.20 yesterday and then all we have to do is wait and let them pump it back up to $103.50 and we short it again and already we're back to $103.25 (7:30) for a quick $250 per contract gain and now we wait for the next run-up and see if we can short them again – maybe at $104 this time.  If people are going to manipulate the Futures – that's fine…
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Free-Fall Friday – Are There Any Dips Left to Buy?

SPY DAILYDown?

No one told us markets could go down?  This is an outrage, I demand an investigation – TURN THOSE MACHINES BACK ON!!!   

Has it already been a week since I said "Stop the Rally, We Want to Get Off"?  As I noted in that post, we began our list of 12 Long Put Plays for Members on Thursday of last week (near the end of what I called "A Weak Week of Denial") and some have already doubled while others, like PCLN, have gotten even cheaper, which only makes us love them more…

I concluded that this rally was fake, Fake, FAKE and gave my reasons on Friday so no point in going over them again – now we're just watching and waiting to see what sticks as we haven't actually done a lot of technical damage (see Dave Fry's chart) – Yet! 

Although we were TRYING to get bullish on Monday, we did so only after setting more aggressive targets in our Weekend Review of the 5% Rule (see post for details and levels) and by 10:09 on Monday, our first trade idea in chat was the very bearish TZA spread that I featured again in Tuesday's post, which was the April $17/18 bull call spread at .42, selling the April $17 puts for $1 for a .58 credit.  TZA finished at $18.39 yesterday and the spread is now .54 but the short puts are down to .65 for a net gain of .47, which is 81% in 3 days and a good way to offset the 2.3% drop in the Russell – isn't leverage fun?

What was not fun is what happened to people who trusted Credit Suisse to run an honest game with their TVIX instrument.  As noted by ETF Digest's David Gillie, an ETN is an unsecured, unsubordinated debt security with significant basis on the credit rating of the issuer. Although ETNs may be named to indicate tracking certain futures markets or indices, due to the fact that their holdings are credit notes rather than tangible assets, such as ETFs, their price becomes largely supply and demand based rather than based on underlying holdings.  As Kid Dynamite points out – it does say right in the TVIX prospectus:

The long term expected value of your ETNs is


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Thin-Air Thursday – A Weak Week of Denial

We HAVE to try to get more bullish.  

HAVE to as in forced against our will.   HAVE to as in forced against reason and rational thought.  We HAVE to follow the herd or be stampeded by it despite screaming FACTS like the ECRI data on the right that CLEARLY shows that the herd is INSANE!

USUALLY, the market (and its investors) understands that where there is smoke,t here is fire.  The last time ECRI was this low (on the way down) was early 2008, by which time we KNEW the economy was stalling and the Government gave us a tax rebate that goosed us for a few months but then we crashed and burned in a horrible, horrible mess that kind of made us wish they hadn't screwed around in the first place.  

The ONLY OTHER TIME ECRI was this low, since the great depression, was back in 2001, but the Nasdaq had long since crossed 3,000 from the other direction and was on it's way from 5,000 to 1,500 – only a 70% drop.  Don't worry though, in 2007 the Nasdaq was all the way back to 2,850 and then only fell to 1,250 and that's just 56% so this time may indeed be different despite the lower low in 2007 on the 6-year cycle that we're again in year 5 of.  

Clearly, things are much better than they were in late 2008/early 2009, right? I believe, at the time, people thought the World was going to end and they were lining up at banks in Europe to withdraw money and the US had 300 bank failures and the FDIC was down to its last $50M to cover the $8Tn worth of cash on deposit (all better now, they have $850M!) and 1,000,000 people a single month were losing their jobs…  Yes, things are better than the end of the World, that's for sure!  

But, are they Dow 13,200 better?  Are they S&P 1,400 better?  Are they Nasdaq 3,050 better?  

The NYSE doesn't seem to think so.   Although the Dow (14,100), the S&P (1,560) and the APPLdaq (2,800) and even the Russell (850) are all within striking distance of their 2007 highs, the NYSE (10,300) is still 21% below at 8,125.  Why is our broadest market index, whose capitalization ($16Tn) is larger than the Nasdaq ($5Tn),
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Thank GOOG It’s Friday!

SPY DAILYCan we end the week with a bang for a change?

Google had tremendous earnings last night (10% beat) and that has the Futures flying (along with AAPL’s IPhone 4S release, which has, as usual, lines around the block to buy their product on the first day).  We already made some quick futures money in Member Chat, shorting the Nas (/NQ), Dow (/YM) and Oil (/CL) at 6am in Member Chat.  Why go short – just because we had a silly pre-market run-up and we wanted to lock in gains – now it’s 7:30 and we’re done – waiting and seeing how things go into the open

Futures trading is very useful for locking in pre-market gains but you have to be very careful or it’s just as easy to blow them and, as we demonstrate in Las Vegas Sunday Night – the futures markets are clearly a load of manipulated BS – especially in thin after-hours and pre-market trading.  Fortunately though, that’s fine with us as one of the main lessons at PSW is "We don’t care IF the market is rigged, as long as we can figure out HOW the market is rigged and place our bets accordingly."  

The news we didn’t want to risk the futures on comes up at 8:30, as we get the Retail Sales Report for September and not much is expected after a very weak August, where Auto Sales really dragged us down with a 0.2% drop and there was nothing sexy about the other items either.  Still, one thing people fail to grasp when looking at these charts is that the numbers are in MILLIONS, not thousands – so August 2011 was $389,502,000,000 in total sales and up $26Bn from last August.  That’s a pretty healthy pace of $4.6Tn in just Retail and Food Services – what recession?    

NYMOAs you can see from David Fry’s chart, we probably need to work off some overbought conditions before we can have a proper rally.  Also, in an early Alert to Members this morning, we looked over our updated Big Chart and determined it was very unlikely that we will hit the levels we need to go bullish into the weekend so we are already planning to short the Nasdaq into the morning pop to put us neutral into the weekend with a 15/15 allocation (short-term positions, of course).  …
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Zero Hedge

Buildings Collapse, Thousands Take To The Street After Powerful Quake Shakes Mexico City

Courtesy of ZeroHedge. View original post here.

On the anniversary of a massive 1985 earthquake that killed at least 5,000 people, Mexico City has been shaken by another powerful earthquake, the second the shake the city in the past two weeks. Ironically, the quake occurred just two-hours after an earthquake drill. The 7.4 magnitude quake shook buildings in the capital city, sending thousands rushing into the streets, according to Reuters.

...



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ValueWalk

FBN Beats CNBC Even During Delivering Alpha Week

By VWArticles. Originally published at ValueWalk.

Fox Business Network ratings for the week of September 11th – September  15th.  FBN beat CNBC even during their big annual Delivering Alpha Conference which is one of the biggest investment conferences of the year with Lou Dobbs leading the pack – another big win for FBN – see more details below

FOX BUSINESS NETWORK SWEEPS CNBC IN BUSINESS DAY FOR EIGHTH TIME THIS YEAR

]]> Get The Full Ray Dalio Series in PDF

Get the entire 10-part series on Ray Dalio in PDF. Save it to your de...



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Phil's Favorites

Can the world's megacities survive the digital age?

 

Can the world's megacities survive the digital age?

Courtesy of Christopher H. Lim, Nanyang Technological University and Vincent Mack, Nanyang Technological University

Today, megacities have become synonymous with economic growth. In both developing and developed countries, cities with populations of 10 million or more account for ...



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Insider Scoop

AMD, Marvell Gain Semiconductor Share In Q3

Courtesy of Benzinga.

Related AMD Fast Money Traders Share Their Picks In The Chip Space AMD, Bank Of America, Gilead, Intel: Fast Money Pic...

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Members' Corner

"Citron Exposes Ubiquiti Networks"

What do you think?

"CITRON EXPOSES UBIQUITI NETWORKS" 

Does Ubiquiti Networks (NASDAQ:UBNT) actually have real products that sell to consumers? Of course! So did Valeant and WorldCom, but that does not stop its financials from having every indication of being completely fraudulent.

Citron will detail a series of alarming red flags and detail how Ubiquiti Networks is deceiving the investing public.

Read the full report here.

...

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Chart School

Semiconductors Breakout

Courtesy of Declan.

It was somewhat disappointing not to see the Nasdaq and Nasdaq 100 make the break from resistance. However, the Semiconductor index did manage a breakout of 1,150. There was some weakness into the close but the fact the bearish engulfing pattern has been negated means the bearish overhang created by this pattern has been consumed.


The Russell 2000 made respectable gains as it works towards July highs. I would expect a reversal off 1,450 resistance but if such losses can hold above 1,430 then it will set up a bullish handle f...

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Digital Currencies

Comparing Bitcoin, Ether, & Other Cryptos

Courtesy of Zero Hedge

Unless you’ve been hiding under a rock, you’re probably aware that we’re in the middle of a cryptocurrency explosion. In one year, the value of all currencies increased a staggering 1,466% – and newer coins like Ethereum have even joined Bitcoin in gaining some mainstream acceptance.

And while people like Jamie Dimon of J.P. Morgan and famed value investor Howard Marks have been extremely critical of cryptocurrencies as of late, many other investors are continuing to ride the wave. As Visual Capitalist's Jeff Desjardins has noted in the past, ...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Biotech

Can low doses of chemicals affect your health? A new report weighs the evidence

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

 

Can low doses of chemicals affect your health? A new report weighs the evidence

Courtesy of Rachel ShafferUniversity of Washington

Assessing the data. LightField Studios/shutterstock.com

Toxicology’s founding father, Paracelsus, is famous for proclaiming that “...



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Mapping The Market

The App Economy Will Be Worth $6 Trillion in Five Years

Courtesy of Jean-Luc

This would be excellent news for AAPL and GOOG to a lesser extent although not inconsequential:

The App Economy Will Be Worth $6 Trillion in Five Years 

In five years, the app economy will be worth $6.3 trillion, up from $1.3 trillion last year, according to a report released today by app measurement company App Annie. What explains the growth? More people are spending more time and -- crucially -- more money in apps. While on average people aren't downloading many more apps, App Annie expects global app usership to nearly double to 6.3 billion people in the next five years while the time spent in apps will more than double. And, it expects the...



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Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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