In trading on Wednesday, shares of KBR Inc (Symbol KBR) crossed below their 200 day moving average of $15.15, changing hands as low as $15.12 per share. KBR Inc shares are currently trading off about 1.8% on the day.
For the second week in a row the S&P 500 Index related volatility indexes hardly budged. Three out of four were lower with the longest dated, VXMT, up slightly on the week.
We’ve ranted and raved in various forums about how VVIX has been holding up despite a lower VIX. It was kind of like the last holdout for higher equity market related volatility until this past week when it took a 12% dive. This puts VVIX closer to the lower end of the historical range. I guess we will now focus on SKEW which is the sole index that remains relatively high.
Since the equity market bottomed in February both VXX and UVXY have given back all the early 2016 gains and then some. As long as contango prevails in the VIX futures term structure and VIX remains low we will probably continue to see SVXY widen the 2016 lead on the long funds.
I’ve started looking beyond broad based equity market volatility in this space. This week the biggest moves to the upside came from the currency focused volatility indexes. If something is getting ready to upset the financial markets maybe it is macro in nature and the heightened risk is showing up in $BPVIX, $JYVIX, and $EUVIX.
Finally, on Friday the CBOE Options Institute held the first of a series of focus classes. We spent the day covering all things VIX and Volatility with a great group of students. I actually like these sorts of classes because I always seem to come away with new things to work on based on student questions or comments.
One student noted that he likes to buy SVXY on any pull back of about 20% and this prompted another student to ask if he’d ever considered selling out of the money puts on SVXY. We fired up LiveVol Pro and took a look at the skew of SVXY options. A condensed version of that chart appears below showing the skew for SVYX options expiring on September 16th.
SVXY finished the week at 73.44 and we kicked around different 60 strike SVXY puts. The skew chart above shows the IV for September 16th SVXY 60 Puts is around 80%. With volatility like that priced into options we looked at the bid side for all the 60 strike puts expiring in September. With Weeklys there are actually five alternatives to consider.
The premiums ranged from 0.35 for the September 2nd puts to 2.05 for the September 30th contracts. Of course this is the equivalent of being short volatility since a volatility spike can take 20% out of SVXY in just a day, but if a trader would be a willing buyer of SVXY on a dip to 60.00 the opportunity to get paid to do so exists since the IV is so high for out of the money puts on this ETF.
In trading on Thursday, shares of Legg Mason, Inc. (Symbol LM) crossed above their 200 day moving average of $34.19, changing hands as high as $34.33 per share. Legg Mason, Inc. shares are currently trading up about 1.3% on
At Holdings Channel , we have reviewed the latest batch of the 36 most recent 13F filings for the 06 30 2016 reporting period, and noticed that BlackRock, Inc. (Symbol BLK) was held by 14 of these funds. When
Looking at the universe of stocks we cover at Dividend Channel , on 8 11 16, Hercules Technology Growth Capital (Symbol HTGC) will trade ex dividend, for its quarterly dividend of $0.31, payable on 8 22 16. As a
Looking at options trading activity among components of the Russell 3000 index, there is noteworthy activity today in American Electric Power Company, Inc. (Symbol AEP), where a total volume of 9,263 contracts has been traded thus far today, a
The CBOE Options Institute is hosting the first in a series of classes that will focus on different aspects of option and volatility trading. The first class, appropriately named Focus on VIX and Volatility Products, will be held on Friday August 19th at CBOE. For those unable to make it to Chicago the class is also available online. Specific topics to be covered include
- VIX and the behavior of volatility indexes
- VIX futures and options price behavior
- Trading VIX related Exchange Traded Products
- Long, short, and neutral volatility strategies
In addition to CBOE instructors, Mark Sebastian will be on site to discuss his approaches to trading VIX and from noon to 1:00 we will be broadcasting an episode of Volatility Views on the Option Insider Network from the CBOE Classroom.
The options institute instructors will also be available to answer questions about all things related to using volatility as a tradable asset. As an extra bonus all attendees will receive a copies of Option Strategies for Advisors and Institutions as well as Volatility Trading Strategies (scheduled to be published in the fourth quarter of 2016) by Russell Rhoads. Early bird pricing for this class ends this coming Friday August 5th..