BY ANDREW GIOVINAZZI
October 31, 2024
Yo Pit Crazies,
What you see below is a snapshot of the S&P 500 Index ETF (Ticker: SPY). Stocks still want to rally even as the Election gets closer. There was no shortage of election irregularities going on in Colorado, Michigan, Virginia or Pennsylvania today reported on social media. What I did not know is that it is possible to cast an illegal vote, get charged but there is no mechanism to undo the vote in some states.
Crazy town! I did not know Crazy Town was a rock band but I digress.
The point of this is that these incidents do give credence to the worries about a post-election contest that will upset markets. Traders have been pricing this for 4 weeks now at least.
SPY chart with IV30 and HV30
The volatility graph on the bottom of the chart tells a story.
You just have to know what to look at.
Volatility Risk Premium (VRP) is a great indicator
I circled the important part of the chart below. IV30, 30 day implied volatility, is trading way above the actual 30 day average volatility of the SPY. That premium is known as the VRP. Right now that premium is at highs of the year. Normally as the graph below shows there is an eventual correlation between IV and RV.
That is the relationship I trade in Weekly Profit Cycles and ultimately what makes VIX move up and down. I expect some convergence post November 5th.
Of course we will trade that in Weekly Profits Cycles.
To Your Trading Success,
AG
Andrew Giovinazzi
30-Year Trading Pro
See what's hot at option pit
CAPITOL GAINS: SMR Aug16 7 call closed for a 150% gain
DELTA STRIKE: VLY Mar15 8 puts closed for a 88% gain
PFE May17 26 calls closed for a 66% win
OP MENTORING: SPY Mar22/19 510 put calendars and 520 calls for 6.4% gain
OPTION SHOPPER: ERX Mar28 65 calls closed for a 90% gain
Heading
I Got Squeezed and It Made My Week
Almost Nothing About This Is in Your Control
Nobody Understands the Oil Spike, Apparently
SPX holding 20-day but needs 7713.75 to rally
The Bitcoin Hater Is Buying
