To say last week was a rough one for the market would be an understatement. It was the biggest weekly loss we’ve seen since 2012, and perhaps worse than that, it really got traders wondering if stocks are far more vulnerable than they may have first thought, an that is exactly what they are... Yesterday we got to see a small recovery in the market but not enough to call it a reverse in the trend. Excited to see what the next trading session has to offer.
For everyone following this blog,
About two weeks ago I purchased May 16 VIX calls, sold half of them wednesday and I will be looking to sell the other half today. If the market opens down I am positive we will see the VIX head up another notch... I do think the vix has the possibility of hitting the 19's next week but because I hate theta (when I don't want it) I will be getting rid of these today.
I recently wrote an essay where I am trying to break down the math of a relatively complex option pricing model, the black and scholes.
This mathematic model have been used to price option for the past 40 years and is the most popular model even if it has some major limitations.
Click here to read more.
What is emerging markets and $EEM
The definition of an Emerging economy is: “A nation's economy that is progressing toward becoming advanced, as shown by some liquidity in local debt and equity markets and the existence of some form of market exchange and regulatory body” according to investopedia. Emerging markets generally do not have the resources and technology that western and northern Europe, North America and Japan have. They also have less market efficiency, and lower accounting and securities regulations. However, they do have banks, stock exchanges etc. Emerging countries are interesting to investors because they usually have a faster growing economy measured by GDP. Investments in emerging markets come with much greater risk due to political instability, domestic infrastructure problems, currency volatility and limited equity opportunities (many large companies may still be "state-run" or private).
iShares MSCI Emerging Markets ETF is an exchange-traded fund incorporated in the USA. The ETF seeks results that correspond generally to the price and yield performance of the MSCI TR Emerging Markets Index. The ETF will concentrate its investments in a particular industry or geographic region to approximately the same extent the Index is so concentrated.
I like the EEM OTM call time spread buying the earnings cycle and selling the Apr call.
During the trading hours on Friday, the Spot Gold raised its value from $1283.85 to $1306.75.
if Gold breaks the resistance levels at $1303.55-1309.20, the aim will be reaching and testing the zone $1316.35-1321.30.
If the $GLD opens up or flat during the upcoming session I will be looking at buying a calender spread for may
During fridays session we had someone buying 30k may 16 VIX calls and selling 30k may 26 calls. There is no info about the exact trade price but someone is going big on an increase in IV.
During Fridays trading session $SPX set a new high and also showed a strong resistance around the magical number 1900, the trend tried to break through 3 times during the day but failed. We are currently in a relatively solid downtrend but the 180 day trend is far from broken. $VIX took a big step up to the mid 14's. However, to me it seems like the VIX futures is relatively cheap now and will probably make another step up early next week.
Long term strategy: Personally I believe in a smaller pull back but that we will be in this range +-20 points for the upcoming months. So I choose to go with a double diagonal spread on the $SPY (Because I prefer $SPY over $SPX)
SPX just set a new high but is now down 7 points. Interesting to see if the market will ever pass the 1900 mark. VIX closed the space between the candles which makes a little bit of room for the SPX to jump a few points higher.
From OCC data, here's a look at March 2014 marketshare figures.
VIX is on the bottom now when SPX set a new high. A 0.6% move, on no news at all. Paul Ryan did have a budget speech but that can not have been it.