A few weeks ago, I had the pleasure of speaking to students in the UCLA MQE program on the topic of Understanding and Trading Volatility Derivatives. It was a data-driven, practical lecture covering the VIX, volatility ETNs, and trading strategies tied to volatility structures.
After the session, I assigned a set of homework questions to reinforce key concepts — the kind of material that goes beyond theory and gets at how volatility products behave in real-world markets.
Join Larry McMillan as he discusses the current state of the stock market on June 2, 2025.
At McMillan Analysis, our approach to selling naked puts is grounded in data, probability, and risk management—not gut feelings or "favorite" stocks. Each trading day, we apply a rigorous screening process to identify the highest-quality put-write candidates, designed to strive for consistent returns while minimizing downside risk.
Some companies typically make a large gap move after earnings are reported. Large post-earnings moves are caused by the fact that – for some companies – it is difficult for analysts to accurately forecast the earnings. Historically, NVDA has been one of many such companies.
The broad market continued to rally through May 20th -- even shrugging off a downgrade of US debt over the weekend. But on Wednesday (May 21st), a poorly received US Bond auction finally sent the market spiraling downward 100 points. That was enough to generate some sell signals.
We have run a couple of articles about the various covered writing ETFs, most of them listed at Yieldmax.com. We reviewed CONY, MSTY, NVDY, and TSLY, which are covered writing ETFs based on COIN, MSTR, NVDA, and TSLA, respectively. They are generally interesting, and it you like the underlying they are worth owning in your portfolio. For the purposes of this article, we are going to refer to these ETFs as the “standard” ETFs.
Stocks have continued to rally, after last weekend's positive tariff meeting between the U.S. and China. $SPX gapped higher on Monday, blasting right through former resistance at 5700 and 5800, and thus establishing a new bullish pattern on its chart.
The market has shown impressive strength recently, with $SPX closing above the key 5800 level. That move alone adds to the bullish tone, but the real question now is: Could this be the start of a push to new all-time highs?
There’s one indicator that might offer a clue — Cumulative Volume Breadth (CVB).
The market rallied early this week, peaking out at about 5700 on $SPX. A modest pullback has taken place since then. There is resistance from there on up to 5800. A close above 5800 would be bullish. Otherwise, the SPX chart remains bearish.
There are multiple support areas on down to the early April lows at 4850-4950. They are marked with horizontal red lines on the $SPX chart in Figure 1. There is one gap left on the chart (circled in Figure 1).
There has been a good deal of talk in option and other trading circles lately about how high realized volatility is, even though implied volatility has begun to taper off. Which one is “right?”
