• Market News | Trader Talk | Trade Ideas | Jul 24, 2016, 2:01 PM

    Weekend Review - Russell 2000 Index and Options - 7/18/2016 - 7/22/2016

    Weekend Review - Russell 2000 Index and Options - 7/18/2016 - 7/22/2016

    Last week the performance for the Russell 1000 (RUI) and Russell 2000 (RUT) was as close as I’ve seen it since I’ve been doing these blogs.  RUI gained 0.67% and RUT was higher by 0.65% for what we will say is within the margin of error (I’m stealing from the political polls).  For the year RUT is maintaining a small lead on RUI up 6.78% versus 6.40%.  This is the second week in a row with RUT in the lead which is pretty impressive considering back in February RUT[...]

  • Market News | Jul 22, 2016, 1:56 PM

    The Weekly Options News Roundup – 7/22/2016

    The Weekly Options News Roundup – 7/22/2016

    The Weekly News Roundup is your weekly recap of CBOE features, options industry news and VIX Index and volatility-related articles from print, broadcast, online and social media outlets. Live With Livevol CBOE hosted the “Professional Traders Summit” this week, featuring options industry professionals discussing various trading strategies. During the event, CBOE’s Catherine Clay, Vice President, Business Development, provided a live demo of Livevol X, a next-generation execution[...]

  • Trader Talk | Jul 21, 2016, 4:26 PM

    Earnings Next Week - 7/25 - 7/29

    Earnings Next Week - 7/25 - 7/29

    Next week is the heaviest earnings week with respect to stocks with Weeklys that I can recall.  As always the data below is based on the last three years of earnings results unless the ticker is in italics.  The columns show the biggest rally, biggest drop, average move, and what the stock did last quarter in reaction to earnings.

  • Technical Analysis & Charts | VIX | Trader Talk | Jul 21, 2016, 2:36 PM

    The Clean-Plate Club

    The Clean-Plate Club

    Little did I know how soon I'd be back to report on the status of the last line of my most recent post - specifically my declared hope/dream to be rid of the SVXY that became like a pebble in my shoe. Yesterday (July 20th), when VIX scraped low in the elevens and SPX scaled a steep hill, I starting thinking about and fearing a future that might not include SVXY prices more attractive than those I was seeing point-blank.  Biting the bullet and sweating through the pain, I sold all shares of[...]

  • Trader Talk | Education | Jul 20, 2016, 2:23 PM

    Analysis of an IBM Earnings Trade

    Analysis of an IBM Earnings Trade

    Students from CBOE classes often keep in close touch with us long after they have visited the Options Institute.  I heard from one OI alumnus on Monday who noticed that IBM was set to report earnings after the close. They also had taken a look at the stock price reaction to earnings over the last three years.  On average IBM has moved up or down about 4%, but the majority of those moves had been to the downside.  The thing that stood out for this former student was that the biggest[...]

  • Education | Jul 20, 2016, 7:54 AM

    How Judy Greer Might Suggest Cheryl Tunt Hedge Her Portfolio

    How Judy Greer Might Suggest Cheryl Tunt Hedge Her Portfolio

    I’m using my blogging ability to wish a happy birthday to an American Treasure, Judy Greer.  Greer first caught my eye as the younger sister in the under-appreciated classic Chicago movie, Kissing a Fool.  Many people may remember her as Jennifer Garner's enemy in 13 Going on 30 (I was rooting for Judy's character).  She’s also appeared in many TV shows such as Arrested Development and Two and a Half Men.  My favorite role, however, just uses Judy’s voice as[...]

  • Education | Jul 18, 2016, 4:32 PM

    Hunter S. Thompson Would Suggest Focus in Your Trading

    Hunter S. Thompson Would Suggest Focus in Your Trading

    If he were alive today Hunter S. Thompson would be one year short of becoming an octogenarian and celebrating his 79th birthday.  Anyone who has seen Johnny Depp’s depiction of the ‘gonzo journalist’ in the 1998 movie Fear and Loathing in Las Vegas knows that would be nothing short of a miracle.  What initially made Thompson famous was the book Hell’s Angels:  The Strange and Terrible Saga of the Outlaw Motorcycle Gangs which was published in 1966.  When[...]

  • Technical Analysis & Charts | VIX | Education | Jul 18, 2016, 10:53 AM

    Weekly Market Outlook - A Breakout Amid High Valuations

    Weekly Market Outlook - A Breakout Amid High Valuations

    The market (the S&P 500 anyway) rekindled the rally early last week, finally pushing through the resistance of its May 2015 peak at 2135 to move to a high of 2169. But, it didn't end the week with the same zeal it started it with. In fact, on Friday the index lost a little ground, and logged the first lower low in almost two weeks. A sign that the weight of the 8% gain over the past three weeks and the 16% gain since February has become too much? Possibly. Yet, that doesn't inherently mean[...]

  • VIX | Trader Talk | Trade Ideas | Jul 17, 2016, 12:00 PM

    Weekend Review - VIX Options and Futures - 7/11 - 7/15

    Weekend Review - VIX Options and Futures - 7/11 - 7/15

    With VIX testing 2016 lows this past week the soon to be retired July future headed lower at a slightly faster rate than VIX dropping 6.43% versus 4.02%.  Even with the bigger loss on the week the July contract finished the week at more than a one premium to VIX.  We will see on Wednesday morning if the futures or the spot index win the tug of war into July settlement.  I would be remiss if I didn’t point out the steepness of the VIX curve from August to December.  VIX is[...]

  • Market News | Jul 17, 2016, 8:00 AM

    Weekend Review - Russell 2000 Index and Options - 7/11 - 7/15

    Weekend Review - Russell 2000 Index and Options - 7/11 - 7/15

    It was quite a week for small cap stocks as the Russell 2000 (RUT) rose 2.4% while the Russell 1000 (RUI) gained 1.5%.  This strong week for RUT places the index up 6.11% for 2016, a tad more than RUI’s 2016 gain of 5.71%.   Even more impressive for RUT, the small cap index is up 26.4% since putting in a closing low of 953.72 back in February. In the volatility space both VIX and the CBOE Russell 2000 Volatility Index were lower last week.  The RVX / VIX premium[...]

  • Market News | VIX | Trader Talk | Trade Ideas | Jul 16, 2016, 12:00 PM

    Weekend Review - Volatility Indexes and ETPs - 7/11 - 7/15

    Weekend Review - Volatility Indexes and ETPs - 7/11 - 7/15

    Short term volatility was the big loser among the four S&P 500 related volatility indexes as VXST lost over 10% last week.  This was more than two times the drop in VIX and more than three times the drop in VXV and VXMT.  The result is a pretty darn steep curve indicating concerns about the second half of this year for the stock market are lurking around in option volatility. Despite the drop in VIX the VIX of VIX rose last week.  As I typed that I realized that two[...]

  • VIX | Trader Talk | Trade Ideas | Jul 16, 2016, 7:36 AM

    Baseball, hot dogs, apple pie, and...VIX shortcake

    Baseball, hot dogs, apple pie, and...VIX shortcake

    If you can't wear shorts in the summer, when can you?  At the time of my last writing, I was showing off a pair:  TVIX and UVXY, which everyone knows are really just two legs of the same thing (for my purposes, anyway).  Even though I had donned one leg before the other (I put my pants on one leg at a time, just like everyone else), I took them both off in one motion, as such: But only one day later, my thoughts were consumed in the following manner: From WikiHow's "How[...]

  • Market News | Jul 15, 2016, 3:13 PM

    The Weekly Options News Roundup – 7/15/2016

    The Weekly Options News Roundup – 7/15/2016

    The Weekly News Roundup is your weekly recap of CBOE features, options industry news and VIX Index and volatility-related articles from print, broadcast, online and social media outlets. More Than Just A Manic Monday A new tool has emerged in CBOE’s suite of Weeklys offerings with the planned addition of Monday Weeklys on August 15th. Monday Weeklys allow investors to hedge over-the-weekend risks in addition to targeting event-driven hedging.  The new Weeklys contract shares the same characteristics[...]

  • Market News | Trader Talk | Trade Ideas | Jul 14, 2016, 1:34 PM

    Earnings Next Week - 7/18 - 7/22

    Earnings Next Week - 7/18 - 7/22

    Finally!  The second quarter earnings season kicks into high gear next week.  As always the data below is based on the last three years of earnings results unless the ticker is in itallics.  The columns show the biggest rally, biggest drop, average move, and what the stock did last quarter in reaction to earnings.

  • Cboe Benchmark Indexes | Jul 13, 2016, 9:42 AM

    CLL Index and the Collaring of Stock Portfolio Risk - Blog #9 on 30-Year Price History

    CLL Index and the Collaring of Stock Portfolio Risk - Blog #9 on 30-Year Price History

    The CBOE S&P500 95-100 Collar Index (CLL) invests in short S&P 500® (SPX) calls, long SPX puts and long stocks in order to gather premium income and manage downside risk.  The histogram with the S&P 500 and CLL indexes shows that the S&P 500 had 13 months with declines of worse than 8 percent, while the CLL Index had only 1 such month. Certain index options strategies can be used to help manage left tail risk. The SPX puts at 95 moneyness did help mitigate the downside[...]