Trader Talk Archives - Cboe Blogs

  • Trader Talk | Jul 11, 2016, 9:09 AM

    Market Talk, Part 1: Words and Phrases to Avoid

    Market Talk, Part 1:  Words and Phrases to Avoid

    We hear so much definitive market talk from the financial media, and most of it is careless and quite useless. The best advice is to follow the market action and not the anecdotes and phrases that will put you in the wrong frame of mind. Discipline and hard work trump complacency and laziness, so turn off the noise and be at your best. ‘It will be different this time’ — Mark Twain reportedly said, 'History doesn’t always repeat, but it often rhymes'. Investor/trader emotions[...]

  • Market News | VIX | Trader Talk | Strategy | Trade Ideas | Jul 10, 2016, 12:18 PM

    Weekend Review - VIX Options and Futures - 7/5/2016 - 7/8/2016

    Weekend Review - VIX Options and Futures - 7/5/2016 - 7/8/2016

    VIX finished the week at 13.20 – only 0.10 higher than lowest 2016 close of 13.10.  The front month (July) futures contract was down slightly more than VIX this past week.  Anecdotally I’ve noticed in the past when we see VIX down significantly in reaction to the employment number that the front month contract seems to give up extra value.  I attribute this to a lack of anticipated market news after the employment number until expiration. At least on trader[...]

  • Market News | VIX | Trader Talk | Trade Ideas | Jul 9, 2016, 12:07 PM

    Weekend Review - Russell 2000 Options and Volatility - 7/5/2016 - 7/8/2016

    Weekend Review - Russell 2000 Options and Volatility - 7/5/2016 - 7/8/2016

    On Thursday there was a trending hashtag on Twitter #ThursdayThoughts or something like that.  I was tempted to tweet something like “Buy on any weakness #ThursdayThoughts” but was afraid CBOE wouldn’t find the humor in something that looks like a recommendation.  However, if I had done so I would have looked darn good on Friday.  The tide took all ships higher with RUT gaining 2.4% on the day and RUI up 1.5%.  The Friday rally helped place RUT up 3.65% for the[...]

  • Market News | VIX | Trader Talk | Strategy | Trade Ideas | Jul 8, 2016, 10:59 AM

    Gold - Where's the Risk?

    Gold - Where's the Risk?

    I’ve kept my eye off gold this year and boy have I missed a ride. The GLD ETF is up about 28% in 2016 which leaves most markets in the dust. Apparently #Gold is a trending topic today on Twitter as well. S0 even though the shiny metal is higher, is there any opportunity being anticipated for the rest of 2016? To get a feel for what the market thinks, I always consult option implied volatility. Luckily CBOE has the CBOE Gold ETF Volatility Index (GVZ) where I can get an idea if option[...]

  • Market News | Trader Talk | Trade Ideas | Jul 7, 2016, 4:37 PM

    Earnings Next Week - 7/11 - 7/15

    Earnings Next Week - 7/11 - 7/15

    Things start to get interesting as the early reporters give us results for the second quarter beginning next week.  As always the data below is based on the last three years of earnings results.  The columns show the biggest rally, biggest drop, average move, and what the stock did last quarter in reaction to earnings.  

  • Market News | Trader Talk | Trade Ideas | Jul 6, 2016, 2:02 PM

    Three Trades for #NationalFriedChickenDay

    Three Trades for #NationalFriedChickenDay

    Nothing gets the instructors at the Options Institute more excited than national holidays. Today’s event is National Fried Chicken Day which has us collectively getting together to determine how investors and traders can use the option market to trade America’s second favorite fried food. Peter Lusk suggested we take a look at Yum Brands (YUM) which owns his favorite fast food outlet Kentucky Fried Chicken or just KFC for the kids. Peter is often seen on the weekend heading home on his[...]

  • VIX | Trader Talk | Trade Ideas | Jul 5, 2016, 4:49 PM

    Profiting from the Side Dishes

    Profiting from the Side Dishes

    If it sounded like I had a little trick up my sleeve upon hastily closing my last post with a promise of quick and interesting updates, here's a confession:  Yes, one typing hand closed the post while the other was closing my TVIX short (see detail below). Crown jewel of June 21st, an otherwise lackluster day Everyone who lived through it will agree that nothing in particular happened on June 21st, but somehow I got a little shaken up inside and decided it was a good idea to close[...]

  • Market News | VIX | Trader Talk | Futures | Strategy | Trade Ideas | Jul 3, 2016, 9:20 AM

    Weekend Review - VIX Futures and Options - 6/27 - 7/1

    Weekend Review - VIX Futures and Options - 6/27 - 7/1

    The curve below is what happens when you have the biggest week over week drop for VIX on record. The 42% loss in VIX shattered the previous largest drop of 36.53% which occurred in the last week of 2012. Not so coincidentally both were weeks before a three-day weekend. Late Monday, with the July VIX Futures at 23.70 and spot VIX at 23.85 someone came in taking a long position in the VIX Jul 20th 22 Puts paying 2.75. The payoff at July settlement appears below, but by the end of the week[...]

  • Market News | VIX | Trader Talk | Trade Ideas | Jul 2, 2016, 7:42 PM

    Weekend Review - Russell 2000 Options and Volatility - 6/27 - 7/1

    Weekend Review - Russell 2000 Options and Volatility - 6/27 - 7/1

    Small cap stocks, in the form of the Russell 2000 Index (RUT) were up 2.51% last week, which was a nice rebound from the previous week’s reaction to Brexit vote. However, large cap stocks rebounded by a wider margin with the Russell 1000 (RUI) gaining 3.10%. Both benchmark indexes are higher for 2016 but RUI is had a 1.01% lead on RUT (2.85% vs. 1.84%). VIX experienced the biggest weekly drop on record losing just over 42%. The chart below is just as dramatic, but in the other[...]

  • Market News | VIX | Trader Talk | Futures | Strategy | Jun 30, 2016, 6:04 PM

    First Half of 2016 Confirms a Higher Volatility Regime

    First Half of 2016 Confirms a Higher Volatility Regime

    We are already half way done with 2016 and it appears what we thought going into the year is being confirmed by SPX implied volatility. If the Fall of 2015 there was lots of chatter about the equity markets in the US shifting from a low to a high volatility regime. The low volatility regime had been in place for several years and the first signal of a change came back in late August 2015 when VIX topped 50 intraday for the first time since the great financial crisis. I have two favorite charts[...]

  • Market News | VIX | Trader Talk | Education | Trade Ideas | Jun 28, 2016, 9:19 AM

    How Did the Brexit Timeline Affect Volatility?

    How Did the Brexit Timeline Affect Volatility?

    Editors note - the following blog was put together by a team of interns from CBOE.  Nicholas Ghilardi will be a Junior at the University of Illinois in Urbana-Champaign and is majoring in Engineering Physics with a minor in Mathematics. Gillian Hood will be Junior at Vanderbilt University and is majoring in Economics with minors in Corporate Strategy and Finance. Noah Silverman will be a Sophomore at Washington University in St. Louis and is majoring in Finance.  Last Thursday,[...]

  • Market News | VIX | Trader Talk | Strategy | Trade Ideas | Jun 26, 2016, 6:30 PM

    Weekend Review - Russell 2000 Volatility and Options - 6/20 - 6/24

    Weekend Review - Russell 2000 Volatility and Options - 6/20 - 6/24

    Both large and small cap stocks got hit on a week over week basis, with the Russell 2000 (RUT) holding up slightly better (-1.47%) than the Russell 1000 (RUI) which lost 1.62%. For the year both are down less than 1% with RUI holding a slight year to date performance edge of 0.40%. In the past when there is heightened concern regarding the global equity markets the RVX / VIX premium tends to drop to low level. That happened in early 2016 and that happened again Friday as the premium[...]

  • Market News | VIX | Trader Talk | Futures | Trade Ideas | Jun 26, 2016, 2:41 PM

    Weekend Review - VIX Options and Futures - 6/20 - 6/24

    Weekend Review - VIX Options and Futures - 6/20 - 6/24

    On Thursday the world appeared to have dodged a bullet, but much like counting your chickens before the hatch, the market reacted a little too quickly and early to the assumed outcome of the EU referendum in Britain. The result was Friday which does not need to be rehashed here. The week over week changes for VIX and the standard monthly VIX futures appear below. Things we look more dramatic if I’d use the Thursday to Friday changes to construct the chart. Periodically I’ll[...]

  • Market News | VIX | Trader Talk | Futures | Trade Ideas | Jun 25, 2016, 1:12 PM

    Weekend Review - Volatility Indexes and ETPs - 6/20 - 6/24

    Weekend Review - Volatility Indexes and ETPs - 6/20 - 6/24

    Global stocks took it on the chin Friday after the outcome for the vote in Britain determined that the majority of voters want to break from the European Union. Usually I show the week over week change for VXST, VIX, VXV, and VXMT to lead off this blog. Because the week over week change doesn’t tell the full story I included the closing prices from Thursday as well. The lowest line on the chart shows the closing levels for each of these S&P 500 oriented volatility indexes the day before[...]

  • VIX | Trader Talk | Jun 24, 2016, 1:45 PM

    A Quick Thought on VIX Price Action Today

    A Quick Thought on VIX Price Action Today

    I’m in New York today and have been in contact with several different types of market participants. A common theme in the conversations I’ve had about today’s action was that VIX seemed too low relative to the panic going on in global equity markets. VIX in the low 20’s didn’t have the feel of a market panic equivalent to the S&P 500 losing over 3%. However, it is worth noting that VIX moved higher overnight, but has been hovering in a range most of the day. The[...]