Education Archives - Cboe Blogs

  • Technical Analysis & Charts | Education | Futures | Jan 21, 2015, 2:30 PM

    Lack of Liquidity Affects Most Markets

    Lack of Liquidity Affects Most Markets

    We have become accustomed to low volume, low volatility markets.  On certain days you can just feel the intensity and flow potential from the start.  Markets gap up and hit morning highs, rest and then run hard to finish the day -- and all the bulls rejoice.  A runaway gap down and follow through has everyone stumped and waiting for a snapback rally, which may not occur, bids disappear and prices run hard to finish the days on their lows.  This has been the mantra so far in 2015[...]

  • Market News | Technical Analysis & Charts | VIX | Education | Jan 20, 2015, 3:00 PM

    Volatility Remains A Concern - Weekly Market Outlook

    Volatility Remains A Concern - Weekly Market Outlook

    After five straight days of losses for the market, even Friday's big gain wasn't enough to leave the market higher for the week.  That makes the third consecutive week of lost ground for stocks, though there are some hints that the bulls are sensing there's something of a floor materializing near last week's lows (which were pretty well aligned with the previous week's lows). Don't misunderstand that observation - the bulls still have a ton of work to do if they want to convincingly put the[...]

  • Trader Talk | Education | Strategy | Trade Ideas | Jan 20, 2015, 1:45 PM

    NFLX Earnings Trade Idea

    NFLX Earnings Trade Idea

    Netflix, Inc. [Nasdaq: NFLX, $342, up $4.66] is scheduled to release its fourth quarter earnings report today following the close of the market session. Consensus analyst estimates are forecasting earnings per share of $0.45 on overall revenues of $1.48 billion. The same quarter one year prior (Q4 2013) saw EPS of $0.66 on $1.18 billion in revenue. NFLX shares are off by a modest 0.8% in 2015, but the stock has been trading in a bearish pattern since last September with sideways price action since[...]

  • Market News | VIX | Education | Futures | Jan 20, 2015, 1:00 PM

    VIX January Settlement Reminder: Wednesday 1.21.15

    VIX January Settlement Reminder: Wednesday 1.21.15

    Settlement Reminder: Today, Tuesday January 20th is the last trading day for January in the following: VIX, RVX, VXN, GVZ, OVX, VXEEM, VXEWZ, and VXTYN futures and options. These contracts settle tomorrow, Wednesday morning, January 21st. We will post the settlement values when they are released tomorrow morning.

  • VIX | Trader Talk | Education | Futures | Jan 19, 2015, 8:56 AM

    Explaining VIX to a 10 Year Old

    Explaining VIX to a 10 Year Old

    This weekend, as I drove my oldest daughter to one of her many activities, she asked if she could ask me a question. I braced myself for something that may be more appropriate for her mother to answer. However, I was surprised when she uttered the words, “Dad, what’s VIX?” Here’s a summary of my attempt to explain VIX to a 10 year old – Let’s say the amount of money you have in the bank goes up and down with the markets, like those numbers I watch on TV in the[...]

  • Trader Talk | Education | Jan 14, 2015, 3:45 PM

    Martin Luther King Jr. Trading Schedule

    Martin Luther King Jr. Trading Schedule

    It seems as if we just got back to a full work schedule, and we have a long weekend coming up. This Friday, Jan. 16th is Expiration Friday with regular trading hours for all products at CBOE, C2 and CFE.   On Monday January 19th, CBOE and C2 are closed for business, so there will be no Stock, ETF or Index option trading on that date.  Regular trading will resume Tuesday morning. On Sunday evening Jan. 18th,  CFE opens its extended trading session at 5:00pm CST for VIX (VX) and[...]

  • Market News | Technical Analysis & Charts | VIX | Education | Jan 14, 2015, 2:00 PM

    New Study – Funds That Use Options (Part 3 on Related Benchmarks & SPX Options)

    New Study – Funds That Use Options (Part 3 on Related Benchmarks & SPX Options)

    A groundbreaking new study -- “Highlights of Performance Analysis of Options-Based Equity Mutual Funds, CEFs, and ETFs” authored by Keith Black and Edward Szado -- analyzed SEC-regulated investment companies that focus on use of exchange-listed options for portfolio management (options-based funds). This is my Part 3 Blog on the study. The first part of the study presented an analysis of Options-Based Funds over the past 15 years, while the second part focused on the performance of options-based[...]

  • Education | Jan 13, 2015, 6:30 PM

    New Study – Funds That Use Options (Part 2 on Lower Volatility)

    New Study – Funds That Use Options (Part 2 on Lower Volatility)

    A new study -- “Highlights of Performance Analysis of Options-Based Equity Mutual Funds, CEFs, and ETFs” -- analyzed SEC-regulated investment companies that focus on use of exchange-listed options for portfolio management (options-based funds). I still speak with novice investors who think that all options strategies are risky, but the study found that the Options-Based Funds overall have had less volatility than some key benchmark indexes over a 15-year time period. OPTIONS-BASED FUNDS[...]

  • Education | Jan 13, 2015, 3:45 PM

    Wall of Worry is up High in 2015

    Wall of Worry is up High in 2015

    We love market skeptics, as they will take any particular piece of news and spin it negatively.  Don't get me wrong, when there is 'bad' stuff happening we must take notice of it and respond accordingly.  But, is there anyone out there who is not spooked after the first week of trading the new year?  Yes we had a couple of strong days midweek but the indices are decidedly negative. A Wall of Worry is up, and as a contrarian thinker this is where I want to be involved, too many skeptics[...]

  • Education | Jan 13, 2015, 1:56 PM

    New Study - Funds That Use Options – Growth (Part 1)

    New Study - Funds That Use Options – Growth (Part 1)

    A new study -- “Highlights of Performance Analysis of Options-Based Equity Mutual Funds, CEFs, and ETFs” -- analyzed SEC-regulated investment companies that focus on use of exchange-listed options for portfolio management (options-based funds). Key highlights of the study are summarized below, and for more analysis please visit www.cboe.com/funds. CO-AUTHORS of the CBOE-commissioned study on behalf of INGARM are Keith Black, Ph.D., CAIA, CFA, Managing Director of CAIA (Chartered Alternative[...]

  • Technical Analysis & Charts | VIX | Education | Jan 12, 2015, 12:40 PM

    Yields Continue To Fall Despite Looming Fed - Weekly Market Outlook

    Yields Continue To Fall Despite Looming Fed - Weekly Market Outlook

    Stocks were on pace to close last week out with a gain, thanks to Wednesdays and Thursday's big rebound.  But, solid news on the employment front sent stocks lower on Friday, and into the red for the week.  Still, the bulls were just strong enough to hold all the major indices above a key line in the sand, maintaining hope that stocks may find their way out of this lull and renew the bigger uptrend soon. We'll examine exactly how the bulls are hanging on to hope below, after a deeper inspection[...]

  • Market News | VIX | Trader Talk | Education | Jan 8, 2015, 1:00 PM

    Weekly Weekly's Option Report 1.8.15

    Weekly Weekly's Option Report 1.8.15

    // Oil, earnings and stocks with hot options action are all coming your way.  I'm Angela Miles covering Weeklys set to expire tomorrow. Next Friday is a traditional options expiration. Let's get rolling with oil. Oil futures are trading below $50 per barrel this week. In weekly options for BP there are traders taking at-the-money positions at the 36 strike as the stock trades $36. Options contracts are considered expensive[...]

  • Trader Talk | Education | Jan 6, 2015, 10:00 AM

    Fed Policy: 2015 May Be EXACTLY Where Ben Bernanke Wanted to Be

    Fed Policy: 2015 May Be EXACTLY Where Ben Bernanke Wanted to Be

    It's really hard to pinpoint a proper timeline for Fed Policy.  In a perfect world and situation, the Committee would prefer to sit in the background and not have an influence.  But after the 2008 global financial collapse, that could not be done easily.  The dilemma created from the financial crisis was a major puzzle:  go deep with an aggressive policy or wait and see how things would shake out.  The latter was a mistake made in the 1930's that helped extend the Great Depression.[...]

  • Technical Analysis & Charts | VIX | Education | Dec 30, 2014, 3:00 PM

    The CBOE Skew Index Reaches Levels That Say A Correction May Be Coming

    The CBOE Skew Index Reaches Levels That Say A Correction May Be Coming

    (Editors Note:  This sent to us from Bob Lang late last Friday night.  Enjoy) I wrote about the CBOE Skew Index here a couple of months ago and talked about how it had become a fantastic predictor of correction market moves in 2014. To review, the skew index is a compilation of bets placed on out of the money options, mostly puts. These bets are 'looking' for a big move south very quickly, perhaps the result of some sort of 'black swan' event. For the most part, these tail risk bets rarely[...]

  • VIX | Education | Dec 29, 2014, 7:03 PM

    Homeowner's Insurance, VIX, and the Hurricane Analogy

    Homeowner's Insurance, VIX, and the Hurricane Analogy

    When we introduce aspiring option traders to the various pricing factors that determine the value of an option contract we often use an insurance analogy to describe implied volatility. The short version of the story is that implied volatility is the pricing factor that is closely associated with the risk of price movement in the underlying market.  We expand on this idea using the idea of the cost of homeowner’s insurance as a hurricane is bearing down on south Florida. If a homeowner[...]