When things get back to normal, there will be crazy opportunity

BY ANDREW GIOVINAZZI

November 6, 2024

Yo Pit Crazies,

A lot of the last month has been tremendous energy and money poured into the election campaign. America has to do things big and the election for the President of the United States here is one of those things. Is it done to excess? Probably but as Frank Gregory has stated the money that flows through DC is crazy. My recent trip to Arlington, VA in the early summer and the place reminded me of Beverly Hills in California. Crazy money.

That chase for the money cranks up the rhetoric every 4 years.

That is likely to come to an end as most major volatility indicators started to relax Monday into Tuesday. Wednesday we will see for sure. What I do see now is SPX near all time highs riding the AI spending boom. Like other tech booms that I can remember, Mini/PC in the 80s with the Intel processor, the internet in the 90s, internet 2.0 and cell phones in the 2000s, Social media and AI in the 2010s to now. In and amongst those were booms and busts. Opportunity is there every day in the US stock markets.

SPX chart with 30 day IV and 30 day HV

I have been riding this separation in volatilities in my two way trades for several weeks. IV has been to the moon even as traders keep buying stocks. That has been a struggle for the strategy.

Now is the time to grab a payday.

Expect Volatilities to run together into Christmas

SPX is expected to move at least 130 points this week. The FOMC will come out on the 7th and probably knock down rates again. That could send SPX to the moon. I expect VIX to dump to 16 or lower. With the election and rates in the rearview mirror, volatilities should run together.

This is the best time to own VIX strangles in quite a while. I expect them to pay off this week. Then we get to do it again next week.

Hot Diggety.

To Your Trading Success,