SPY is the best vol trader on the planet

BY ANDREW GIOVINAZZI

December 10, 2023

Each week, I’ll give an overview of a stock and Licia Leslie will follow that up with a chart analysis the next day. Bill Griffo will chime in with macro analysis and Andrew Giovinazzi will then finish out the week with a volatility breakdown.

Have a stock YOU want us to review? Email my team here. – Mark

Hey Trader,

If you missed how I create income from long options, check out my Weekly Profits Cycles presentation and harness the power of volatility.

The SPDR S&P 500 Trust (Ticker: SPY) is the most liquid trading product on the planet. I think there is some crazy volume in China for rebar or mung bean futures but for a listed product in the USA, SPY is pretty good.

The reason it is so good may surprise you. The only listed product on the market with a reliable volatility hedge is SPY. What that means is option traders can separate risks out of the position and trade for very specific ways. That is the basis for my Weekly Profit Cycles program.

What we have going into Friday Dec 08 is an interesting market condition.

Let’s see what it is.

SPY has flatlined and implied volatility is still rising

The chart below shows SPY up top and IV30, roughly the VIX, on the bottom. IV bottomed after the first big rally candle and has picked up steam since. Historically that is a recipe for a move much larger than the IV implies.

SPY 6 month chart with 1 day candles, 30 day IV on the bottom

Volman has kindly jumped in to help with his supreme graphic skills. Consolidation of SPY on the top with IV rising in the red circles historically leads to bigger moves. The only problem is I dont know which way.

Lucky for you Mark, Licia and Vol Man are on the case Monday in the Ticker Show.

Don’t forget to subscribe to my Weekly Profit Cycles and learn to not care which way SPY goes.