Yo Pit Crazies,
Glad to be back in full swing here. I missed you all, and thanks for bearing with me during a tough time for my family.
Now …
Check out the new Vol Trade Desk with Mark and I moving the vol ball forward. Everyday!
Vol Man is also back after a 10-day hiatus. He is thinking 2023 will be a stock pickers market. Why so? Because the Fed is getting out of the game of gaming the market to pump up asset prices.
My hope is the 10-year experiment with radical balance sheet expansion will come to an end.
As I recall, until 2008, stocks did just fine without crazy government spending and interest rate shenanigans. The big question now is if the Fed can hold course. I will believe it when staples like eggs, milk and cheese become affordable again. That is not today.
See below as Vol Man points out a goody.
My favorite vol setup is coming back into view!
Let’s check it out.
The SPY and IV Correlation Is Back In Business
A negative correlation, that is.
The SPDR S&P 500 Trust (Ticker: SPY) rallies, like its big brother the SPX, and implied volatility (IV) should drop by sheer arithmetic.
As stocks climb in value, the same money move is a small percentage move. That should be a lower IV, and an index like VIX is a collection of IVs, so the negative correlation should be stronger.
A near 2% move on Friday is a 32% realized vol. VIX is trading closer to 20%. Traders do not think that big move will continue. Also, the hope springs eternal trade that the Fed stops raising rates is still there.
But watching VIX drop and SPX move up is a good sign things are getting back to normal. As in pre-2020 normal. One can dream!
That also means I should keep my SPYMaster product rolling as I have 15 wins in a row.
Market up, market down I win! Stay tuned for this week and nice offer!
The Rundown
Option Shopper
Licia liked the metal short with Freeport McMoRan Corp (Ticker: FCX) Jan20 44.5 puts closed for a 70% win.
Big Money Shopper
The Mark and Licia show keeps rocking the wins with the Market Vectors Gold Miner ETF (Ticker: GDX) Jan20 31 calls closed for a 75% gain.
Win the Week
Bill rocked another win with the Dow Jones Industrial Average ETF (Ticker: DIA) Feb03 352/348 call credit spread closed for a 80% gain.
To Your Trading Success,
AG