Yo Pit Crazies,

For a while on Wednesday it looked like everything was going to heck in a handbasket. VIX spiked to 30 and SPX was in the dumps. 

Then, like a phoenix rising, the Invesco QQQ Trust (Ticker: QQQ) started a 20 point rally that continued to yesterday. 

The worst performing asset of 2022 is quickly becoming the best performing asset of 2023.  

The narrative is changing rapidly. Rising interest rates were supposed to be good for banks because of rising margins on interest rates and bad for tech growth stocks. 

However, most major banks jumped into recapitalize First Republic Bank (Ticker: FRC).

The big question is if this will be enough to get the market to pull out the tailspin it has been in since Silicon Valley Bank (Ticker: SIVB) went to 0. FRC opened sub-20 but managed to close well into the 30’s.

Let’s take a look.

VIX IV (VVIX) Is Down Quite A Bit, But Not All The Way

All the financial stocks are well off their highs, as in 20% or more. But QQQ is only 2% from the highs. 

That suggests money is moving out of banks in a hurry to higher multiple growth stocks. 

Also, the market is making a bet that the Fed is not going to go back to aggressively raising rates.

Note below that the Vol of VIX got back to Monday’s lows of 95% spiked to near 135% and closed around 110%. 

Yesterday, VIX notched its lowest close in 4 days at 22.9%. 

My issue is the IV of VIX did not get back to lows. Traders are still holding VIX calls after a couple of good opportunities to close them.

VVIX 3 month chart with 1 day candles

We are still in a trading market; I want to sell rallies, or at least take profits on them. 

I closed some calls in Apple Inc (Ticker: AAPL) in the Easy Button yesterday. 

By the same token close options that make money on the downside. I am one of those traders still holding some VIX calls.

I forgot to mention that I dipped my toe into some oil stocks by selling some SPDR S&P Oil and Gas Producers and Exp ETF (Ticker: XOP) puts in the Jan2024 cycle.

To Your Trading Success,

AG