The CBOE has listed $VIX weekly futures – their third attempt at a weekly volatility product that might compete with VXX weekly options. Trading began on July 23rd.
It is estimated that options on the new $VIX weekly futures will begin trading in three or four weeks, although that isn’t set in stone. Certain details have to worked out with the OCC, such a margin requirements. Typically, in the past, those things have taken three or four weeks.
The $SPX chart is now negative, although not terribly so. $SPX traded down to 2045 a couple of days, and has generally found support in the 2040-2050 area. Overhead, there is resistance at 2080-2085, where most trading days in the last week have topped out. There is a series of lower highs on the chart, and the 20-day moving average is declining. All of that adds up to a bearish chart.
Equity-only put-call ratios are bearish, as they continue to rise daily.
It’s been quite some time since we’ve seen the CBOE Volatility Index ($VIX) rise above the 17 level – since early February, in fact. But it did so this week, accompanied by strong advances in the other CBOE Volatility Indices, as well as Volatility Futures, ETFs, and ETNs. These advances in volatility create trading opportunities, mostly when they reverse. In this article, we’re going to review the most pertinent signals, and look at their track records.
Depending on your viewpoint, the “holy grail” of volatility trading can take on a different meanings. To traders, it’s a product that tracks $VIX closely, if not exactly. To exchanges and market makers, it’s a liquid product that draws a lot of trading interest.
The stock market, as measured by the Standard & Poors 500 Index ($SPX) continues to trade in a fairly tight range, which is beginning to frustrate just about everyone. There is support at 2070, and the 2130-2135 area is now strong resistance. As a result, the $SPX chart is neutral.
Equity-only put-call ratios are about as noncommital as I can remember. Both are drifting sideways, meaning they're not really on a strong trend of any kind.
The sale of a naked put is often a very attractive strategy – especially if the put is “overpriced” (although “overpriced can be a very subjective term). In this article, we’re going to look at some of the background on put writing, and then show a systematic way to select which puts are best to write. We’ll start out with equity put options and then talk about selling index put options later on.
The Standard & Poors 500 Index ($SPX) had a few bearish days, but managed to successfully test support near 2070 twice this month. $SPX remains within the trading range of 2070 - 2135.
The equity-only put-call ratios continue to generally trend sideways, which makes them neutral. Even though the standard ratio is trending slightly higher and the weighted ratio is trending slightly lower, neither is on a valid signal at this time.
Despite some indications this week that the market might break down, it did not do so. In fact, the Standard & Poors 500 Index ($SPX) held near the previous support level of 2070, thereby strengthening that level as market support. On the upside, there is resistance at the old highs of 2135, so $SPX remains locked in the 2070-2135 trading range.
Not much has changed in the market in the last week, with one possible exception: was yesterday's breakdown below near-term support significant, or was it just another meandering that will have no follow-through? Based on recent history, it's probably the latter (no follow-through). More than likely, we are still in a trading range for $SPX, between support at 2070 and resistance at 2135.
There has been a rather large amount of hoopla about two new companion ETF’s that are designed to track the cash levels of $VIX – the CBOE’s Volatility Index. There have been articles on Bloomberg, Seeking Alpha, Barron’s, and Yahoo! Finance, not to mention the web sites of the principal’s involved: NASDAQ and Accushares.
