Once Big, Vol Is Now Small

Yo Pit Crazies,


I have to say, Frank Gregory and I called it last week on the sea change in volatility.


This week is already bearing that out …


      • Oil up
      • Coal up
      • Uranium up
      • Government Dysfunction Up
      • Government Collapse Down

This is not what the Biden Administration had in mind, but those are the facts on the ground today.


I already have Capitol Gains ideas turning green on this, and the Big/Little Vol thing is an interesting big picture play.


Because the lower volatility goes, the bigger a deal it is.


And I’ll show you why this is very exciting.


As Jim Morrison said, break on through to the other side …


Government Dysfunction Is Normal


As crazy (and sad) as it sounds, that is the normal way of things.


Pull and push and a big bill turns into a bigger bill that turns into a smaller bill or no bill.


You remember the hot button topic of police reform from the Feds?


Not happening now, but will most likely show up in 2022.


It is the way…


My point is the tug of debate is normal and for now stocks are accepting what we have.


The Fed Is Tapering and SPX Is at an All-Time High


The S&P 500 stock index made a new high yesterday.


The Fed will stop buying bonds — a move known as tapering — starting this year.


Inflation? Well that is for next year.


VIX was down .19 on a Monday when it should be  up .75.


A huge move like the taper and a big shrug.  Not a “big volatility” worry.


The fun begins with the VIX futures because every point down in VIX is higher in percentage terms.


This makes the iPath S&P 500 short term VIX futures ETN (VXX), which owns VIX futures,  MELT faster for every $1 move down in VIX. 

It is math, you see.


Right now, the VIX futures are $3.35 over the VIX cash. That is a lot of melt by Nov. 17.



VXX Nov19 20.5 puts are trading 1.10.


The Lesson:  A lot of volatility trading is math so I want to find ideas that are the most advantageous from a probability point of view.  Remember volatility MOVES.


Capitol Gains w/ Frank Gregory
Option Pit DC and Wall Street insider Frank Gregory and I run a portfolio approach to trading options with stocks that have good long-term prospects based on Frank’s K Street knowledge and my options expertise.


Open Positions in Capitol Gains are percolating …


      • I am riding a SPDR S&P Oil & Gas Exploration & Production ETF (XOP) set of call spreads higher and marking up 15% on the position currently.
      • Petrobras SA  PBR bounced back near $11 yesterday on both oil and the reductions in political strife I outlined this weekend. The position is up 25% since I opened it.
      • Cameco Corp (CCJ) call diagonals are running up 10%.  Uranium is hot.


Join Frank and I LIVE at 11 a.m. EST today to see where we’re going from here. (Hint: It’s up.)


To Your Trading Success,

Andrew Giovinazzi

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