May turned out to be CBOE’s second highest volume month during the Exchange’s Extended Trading Hours options session. Average daily volume during ETH in May was 11,763 contracts per day, surpassed only by November’s 14,118 contracts per day. However, May’s volume was much more consistent, as opposed to the November volume which was highly concentrated in a single trading day in the wake of the U.S. Presidential election. More market participants appear[...]
AIG options were active into expiration. There's been speculation about their search for a new CEO as well as potential stock buyback plans. AIG beat on the top and bottom line during an earnings cycle that has generally been quite strong. They also announced a $2.5 billion repurchase plan.
We take a look at the Weekly ATM straddle as well as a June OTM strangle going into and coming out of the "event".
Full Video below:
Today’s episode of What’s Trading details candy sales, the big business of Easter, and a July put seller in Mondelez International (MDLZ). The link to the video is below as well as additional commentary on the trade. Click here to watch the episode and continue below to learn more about the trade.
The payoff diagram below shows the potential P&L if someone was short (sold) ONE July 40 put in MDLZ for $0.77 and held the position until expiration. The maximum loss is considerable[...]
Market timing is everything in investing, but when you have an egg timer running constantly it makes your opportunity for success that much more difficult. That is what we face as option traders. Now, as option sellers we have the luxury of time being on our side, preferring to let options decay and take in the premium before expiration. Premium sellers are often content with a stock moving sideways. On the other hand, option buyers need stocks to with robust action up or[...]
The CBOE is the leader in listed Index and Equity options – and every so often there is a geopolitical event that can have reverberations in our financial markets. In just the past handful of years, we have experienced significant moves in volatility (both realized and implied) from elections and referendums, typically stemming from the other side of the Atlantic Ocean.
On Thursday June 23rd, a referendum will be held to decide whether or not Britain should leave the European Union.
Tomorrow afternoon (1 P.M. Chicago time) the market will digest the minutes from the April FOMC meeting. In advance of that release (which happens after every FOMC meeting) two (non-voting) Federal Reserve Board Presidents, John Williams (San Francisco) and Dennis Lockhart (Atlanta), both gave speeches that indicated the Fed could hike rates again as soon as June.
The next FOMC meeting takes place on June 14th and 15th and includes a “Summary of Economic Projections” as well as a press[...]
The monthly Employment Situation, or Non-Farm Payroll data will be released before the market opens tomorrow (5/6). This tends to be a market moving event, and given the “data dependency” of the Federal Reserve Open Market Committee (FOMC) and Chair Yellen’s emphasis on the health of the labor market, these are particularly meaningful data points.
According to Reuters, the consensus analyst expectation calls for a net addition of 202,000 jobs in April. The unemployment rate likely[...]
After yesterday’s waterfall-like selloff, a number of global indices are now in bear market territory (20% off highs).
Germany’s DAX benchmark is 24% of April 2015 highs
France’s CAC 40, as of yesterday’s close was nearly 22% of 2015 heights
The Spanish IBEX is off a full 30% from last April’s highs – Ay, caramba!
Yesterday, the Brits joined this ignominious group, with the FTSE 100 losing 3.3% on the day and falling 20.13% from April ’15 highs. While the[...]
Plenty of ink has been spilled about the selloff in global equity markets including SPX and RUT. We have been witness to an escalating VIX and RVX, albeit with significantly lower highs (to this point) when compared to the late August selloff.
Psychologically, we like to be able to attribute market pullbacks to something specific. People want a narrative. They prefer to have something to point to and affix blame.
Jesse Livermore famously spouted, “There is only one side of the market and it[...]
After finishing the first full week of trading in 2016, there was nothing to be happy about the stock market. This was the worst start ever in the history of the stock market, and it all points to some more bad behavior on the horizon. With earnings season around the corner, there is nary a stock that is in position to make a move to higher ground. What seems to be ailing the markets that would have this market down so much?
2016 is turning into the year of the black swans. Four of them hit[...]
The Russell 2000 (RUT) is trading at 1094, 15% off all-time highs, and has only closed lower than this level on one occasion (9/29/15) in the past 14+ months. In October of 2014, amidst the worldwide Ebola scare, RUT closed at 1068 and traded as low as 1018.
Implied volatility of RUT options however, is rather sanguine despite the selloff in the benchmark Small Cap index. The CBOE Russell 2000 Volatility Index (RVX) “measures the market’s expectation of 30-day volatility implicit in the[...]
For those that watch the market with a “technician’s eye” something unusual happened yesterday. It marked the first time since January 31, 2012 when the 50 day moving average on the SPX Index crossed over its 200 day moving average. Technical types call this “The Golden Cross”, which is almost unequivocally considered a bullish formation (especially in concert with increasing volume).
To be fair, in order to set up a Golden Cross, it must be preceded by a “Death[...]
Mark your calendars – this is not to be missed!
A look back at the year that was in the markets with a little bit of everything.
Fundamentals, technical/volatility analysis, options strategy, geopolitics, ideas for 2016 and more.
Please join us Tuesday 12/29 at 3:30 PM CST time for this informative and free Webcast.
Kevin is a Senior Instructor at the Options Institute. He traded equity and index options on the CBOE and PHLX floor for 8 years. He also has extensive experience[...]
Yesterday, in a move more telegraphed than a Jay Cutler Pick 6, the Federal Reserve Board voted unanimously to raise the Fed Funds target rate by 25 basis points. Market watchers, and this blog’s audience don’t need a weatherman to tell them which way the wind blows.
The question, as always is – what’s next? The “dot plot” points to a series of four (4) quarter point hikes over the course of 2016. We will see if the U.S. and Global economy remains on terra-firm,[...]
The end of any calendar year gives us a perfect opportunity to look back and evaluate the year that was, and perhaps prognosticate about the year that may be.
The ^SPX closed @ 2,058.90 on 12/31/14 – up nearly 12% in 2014. As I type, the ^SPX is 2,068 – up fractionally for 2015.
Yesterday and today we traded either side of unchanged on the ^SPX for 2015. The broad market is oscillating between 2080 and 2,052. Yesterday the Energy sector was weighing heavily on the market and when Crude[...]