90 Day realized vol hits the lows for 2023 and 2022

Yo, Pit Crazies,

 

Using indicators to trade is an important skill to learn.

 

Options use there moving inputs to change value:

 

• Price
• Volatility 
• Time

 

Traders can learn how to use these inputs to their advantage. At Option Pit, we’re here to help guide you to better trading and bigger profits. That’s the benefit of our immersive education program!

 

The market can do crazy things, but a trader should know how their position is going to respond.  

 

Speaking of volatility, 90-day realized vol is hitting one-year lows this week. What does that mean? It means we averaged a quarter with realized vol around 18% per day.  We have not seen that since 2021.

SPY 1 year chart with 90 day realized vol in purple

The market  is shifting out of a major cycle.  

 

Are you going to catch it?

 

All Signs Point to A Bull

I know it sounds crazy but lower realized vol has to happen before stocks can start a steady, vol crushing rally.  Low points in the market tend to happen when realized volatility peaks but now always.  The current rally started in October as realized volatility was climbing with Oct as peak vol for the last 6 months.

 

Remember realized vol is a close to close measure of how much stocks are moving.  Daily big candles create those higher realized vol numbers.  The 90 day average number is the smoother line in the chart above.  That means 90 day average realized vol is lower and daily candles are much less than in October.  This is how rallies start.

 

The difference now is these rallies will be lower vol affairs as the market adjusts to interest rates where they are and the Fed interference starts to subside somewhat.   This is a market for lower vol trades so get ready for it.

 

The Rundown: What’s Winning Around Option Pit

Option Shopper and Big Money Shopper

Licia’s candles bringing the gains …

 

Occidental Petroleum Corp (Ticker: OXY) Apr06 62.5 Calls closed for a 247% gain

Micron Electronics Corp (Ticker: MU) Apr21 60 Puts closed for a 54% gain

Easy Button

EZB hit a milestone this week where my trade ideas paid for the 1 year subscription, in 3 months.

ExxonMobil Corp (Ticker: XOM) Apr14 102/111 Strangles closed for a 112% gain

Trade Desk

S&P 500 Mini Index (Ticker: XSP) iPath S&P 500 VIX short term futures ETN (Ticker: VXX) Mar31, Apr06 400/395 strangle, 46.5 puts closed for a 22% gain

Cap Gains

Intel Corp (Ticker: INTC) Apr21/Apr06 28/30 call diagonal closed for a 37% gain

SPYMaster

One more win for SPYMaster which is now at Money Map Press.  If you want to subscribe, contact Ted at 888 Trade01 and he will put you in touch.

SPDR S&P 500 Trust ETF (Ticker: SPY), VIX Apr14/Apr19 390/380 put vertical, 21 puts

closed for a 25% gain. – AG