Yo Pit Crazies,
Good for Ukraine!
As I write this they are putting up a good defense of Kiev, as far as I can tell.
I hope that makes Putin think twice, and maybe China, too.
It is still a massive unknown.
Check the Straddle Value in the SPX
The one-month straddle is an excellent proxy for activity in the S&P 500 (SPX). With the VIX trading 27.59, the 30 day straddle – call and put value – is $230.
On Thursday’s open, the straddle ran $300. At the height of the pandemic in March 2020, the straddle was $400, with SPX roughly half the current value
The funny thing was, SPX moved up more that that in the following month.
I bring this up because the straddle dropping in value means the VIX will be dropping with it. And, usually, higher implied volatilities mean the market is expecting a higher bounce, too.
I am guessing our rally will start to run out of steam here.
If the market is really cooling down, expect the short-term, one-week straddle to start dropping in value.
I would guess a severe volatility crush next week won’t last long and I would add a long strangle to Trading Legion.
It is 2022, after all.
The Rundown
> Capitol Gains w/ Frank Gregory
I am looking at alternative energy next week, particularly Enphase Energy Inc. (Ticker: ENPH)
—–
> Power Income Trader
Bill and I closed our SPDR Utilities and SPDR Financial (Ticker: XLU, XLF) pairs for 30% profit.
We re-added short SPDR S&P 500 Trust/ Xtrackers Harvest 300 China ETF (Tickers: SPY/ASHR) short/long pair.
—–
> Option Shopper
Licia Leslie is shopping for British Petroleum PLC (Ticker: BP calls)
—–
> Pro Trading Room
The Pro Room had a great Friday with the #FridayAlgoChallenge providing some entertainment as well as profits.
—–
> Big Money Flow:
Mark rolled up his 100% win in Boston Scientific Inc (Ticker: BSX). There is still substantial call buying in there.
—–
> Nitro Trader:
Mark’s SPDR Dow Jones Industrial Average ETF (Ticker: DIA) is still smoking with the fly at the short strike. Look for a close this week.
—–
> Trading Legion:
If this action keeps up, I will be looking for a cheap straddle in SPY on Wednesday for the next class.
—–
> Volatility Edge & Volatility Trading Club:
The Option Pit VIX Light Is Yellow Once Again, as all indicators are starting to point south. I expect VIX to be whippy — up and down.
For Vol Trade Club Trade No. 283, I closed another set of VIX Mar15 26 puts for 100% gain.
In Vol Edge, Mark closed some VIX March 15 call spreads for a 50% gain.
To Your Trading Success,
AG