Yo Pit Crazies,
Vladimir Putin facing cancer surgery is yet another surprise headline for 2022.
Reports were light on timing details, however the SPDR S&P 500 Trust (Ticker: SPY) had a case of the nutties on the news …
SPY one-day chart with one-minute candles
Yet another v-shaped bounce for the books.
So much of the movement currently is headline news.
And that means a lot of ugly is priced in.
Time to go “lotto” shopping!
If It’s in the Standard Deviation, Is It Really A Lotto Ticket?
In the May cycle, VIX traded a 20 low, as you can see from Vol Man riding the wave higher.
Currently those VIX May 18 20-strike puts are only $.10 and the 21 puts $.15.
My general rule is that VIX can go back to the reverting low of the cycle if the news driving a vol event is known.
The big difference in the last two weeks is that the China lockdowns are bad .. but they’re now known.
The wild card is how aggressive the Fed will be in moving rates higher.
With a falling GDP, I would think demand for goods coupled with inflation is tamping down demand and doing the Fed’s job for it. Twenty was the low going into the aggressive Fed scenario.
The “lotto” tickets I have in mind are the VIX May 18 22 puts for .25. I think they could see .75 or more next week.
The Rundown
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Long-time student, Richard, with a controlled trade and easy day trade …
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Our first Option Pit Essentials training is here … musing on calls and puts.
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Power Income Trader
Macro Griff closed two iShares MSCI Europe Financials Sector Index Fund (Ticker: EUFN) JUL15 18/16 put spreads for a 73% win.
Bill and I looked at buying VIX May18 23/26 put spreads for .66 today in class.
VIX Edge/Vol Trade Club
I sold some VIX May18 30/40/50 call butterflies for a 56% return and will await the FOMC to decide how to trade the put side.
To Your Trading Success,
AG