August 21, 2025 | Daily JAM, Volatility |
In the last few sessions, as the market worries about what Federal Reserve chair Jerome Powell will say about inflation and interest rates and the likelihood of an interest rate cut at the Fed’s September 17 meeting, volatility as measured by the CBOE S&P 500 Volatility Index (VIX) has started to climb. The VIX rose another 6.37% to 16.69 today, Thursday, August 21. That’s a big move from the low of 14.78 on August 19. But the increase is nowhere near enough to save the VIX Call options I bought back on May 18. Those options had strike prices of 22 and 26–and consequently they expired worthless on the expiration date of August 20.
Back on July 19 I worried that this market was determined not to price in risk and I warned that anyone who owned these options had only about a two week window for the markets to begin more realistically to price in risk. If that move didn’t start by August 3 or so, it would be time to sell and take losses in this volatility play.
When I wrote that on July 19, the VIX was at 16.45. From there the VIX moved consistently lower–well except for a very brief spike to 20.37 on August–hitting 14.36 on August 13.
July 19, 2025 | Daily JAM |
In the long-term I think volatility will rebound. In the short term, In think those of us with bets in the options market on a rise in volatility have a roughly two week window in which near term events could spike volatility enough to make options buys, like my buy of Call Options on the VIX that expire on August 25, pay off. If the next two weeks of so don’t see an increase in volatility, I think it’s time to cut my losses and wait for a market with a more rational–in my opinion–assessment of risk. Why the next two weeks?
May 15, 2025 | Daily JAM, Short Term, VIX, Volatility |
The CBOE S&P 500 Volatility Index (VIX) dropped another 4.24% today to 17.84. I think, once again, the financial markets have become way too complacent about risk. And so it’s time to buy Call Options on the Vix “fear index,” betting that at least one of the many potential volatility events on the horizon puts some fear back into the markets.
May 9, 2025 | Daily JAM, Volatility |
22.53. That was the close on the CBOE S&P 500 Volatility Index (VIX) today. It’s safe to say that stock market volatility is way down. Back on April 21, the “fear index” was at 34.21. On April 8, at the bottom of the turmoil that followed on the April 2 tariffs, the index hit 52.33. But even before that spike, fear had been climbing among investors to 27.86 on March 10 from the very complacent 16.43 on January 31. That was substantially below the 10-year average for the VIX at 18.66. So now the question is how low the VIX will go. And when will it be time to buy VIX Call Options again on a bet that volatility will return.
April 28, 2025 | Daily JAM, VIX, Volatility |
Today, Monday April 28, I’m selling my last two Call Options on the VIX, the CBOE S&P 500 Volatility Index. Not because we’re done with volatility. No way. I expect lots more volatility in the weeks and months ahead. And I expect to put this trade on again. But because these two options expire on May 21
January 29, 2025 | Daily JAM, Volatility |
When AI stocks plunged on Monday on the news out of China’s AI startup, DeepSeek, and fears that this meant the end of the AI ‘bubble,” shares of AI stocks such as Nvidia (NVDA) and Broadcom (AVGO) plunged 17% and the NASDAQ Composite tumbled. But the market as a whole was remarkably unperturbed. The CBOE S&P 500 Volatility Index (VIX), the “fear index” did climb by 20%.
TO ALMOST 18. 18? The 10-year average for the VIX is 18.26! So with the prospect of a collapse in the AI bubble–which I don’t see despite clear extremes of valuation in the sector–the AI trend is real and revolutionary. With the possibility that the Federal Reserve will dash hopes for interest rate cuts in 2025. With the possibility that a renewal of the 2017 Trump tax cuts and new tariffs will revive inflation. With the possibility that the ungovernable extremes of the Republican party will be unable to govern and will really shut down the government in a huge debt ceiling/budget fight. With all of that danger lurking out there, the VIX traded at just 18 on Monday and closed at 16.56 today, January 29? In my opinion this hedge on risk is on sale.
September 24, 2023 | Daily JAM, Morning Briefing, Short Term, Volatility |
Tomorrow, Monday, morning I’ll buy CBOE S&P Volatility Index (VIX) Call Options (so the options will go up in price if volatility does) for my Volatility Portfolio. I’m buying the December 20 Call Options with a strike price of 17 (VIX231220C00017000.)
May 17, 2023 | Daily JAM, Special Reports, Volatility |
Investors and the market indexes remain convinced that the economy will dodge a recession, even if only narrowly. Retail companies, however, aren’t nearly so sure. In the last two days, both Home Depot (HD) and Target (TGT) have cut guidance for the quarter(s) ahead. Consumers, they say, are hesitant to take a trip down the aisle devoted t discretionary goods such as furniture and apparel. With the New York Federal Reserve reporting that consumers look increasingly stretched on their credit card balances, I don’t see that reluctance ending soon. So even if the economy as a whole dodges a recession, I think the shares of companies in the consumer discretionary sector are likely to report their own sector-specific recession or the next quarter or two.
April 14, 2023 | Daily JAM, Short Term, Volatility |
The VIX “fear index,” known more formally as the CBOE S&P 500 Volatility Index (VIX), dropped again today with a retreat of 3.60% taking the index down to a close of 17.16. The VIX, which measures the price that investors and traders are willing to pay in the options market to hedge risk on the Standard & Poor’s 500 in the next month or so, hasn’t been this low in 2022. The prior low for the VIX this year was 17.87 on February 2. You have to go back to December 27, 2021, when the index stood at 17.22 to find a roughly comparable level. With all that lurking out there in the financial world, I find the VIX at 17.16 too good to pass up.
March 30, 2023 | Daily JAM, SCHW, Videos, Volatility |
Today’s Quick Pick is Charles Schwab (NYSE: SCHW) Put Options. Put options will become more valuable as the stock goes down in price. This has been a lousy year for Schwab with the stock currently down about 34% YTD. The reason for this is Schwab makes most of its money on the interest rate spread. Schwab stashes “excess” cash in customer accounts in sweep accounts that pay a very low rate of interest, and Schwab invests that cash in Treasuries, mortgage-backed assets, etc. at higher yields. This works when the overall rate of interest is low because customers have a relatively small incentive to actively move their cash to higher-yielding vehicles. When the Fed raises interest rates, however, some people who had formerly kept their money in these low-return accounts will move their cash to higher-yielding alternatives (often still within Schwab.) This reduces the interest spread that Schwab collects since the company now has to pay more in interest to retain those customers. In addition, Schwab invested that cash in long-term Treasuries and mortgage-backed assets, leaving the company sitting on a lot of unrealized losses in its bond portfolios as bond prices fell as interest rates moved higher. I question whether or not Schwab will be able to meet analysts’ expectations and/or warn on future results when it announces earnings on April 17. I would suggest Put options before the announcement. I added the May 19 Put to my Volatility Portfolio yesterday. For more options plays, subscribe to JubakAM.com.
March 29, 2023 | VIX, Volatility |
Today March 29, the VIX dropped again, losing another 4.01% to 19.10. So I’ll be buying the June 21 Call Option with a strike price of 23 tomorrow. A contract for 100 shares closed at $305 today. This buy will go into my Volatility Portfolio.
March 29, 2023 | Daily JAM, Videos, VIX |
Today’s topic is: Complacency is Rising – Again. I’ve been following the VIX closely throughout the recent market turmoil. The VIX is often called the “Fear Index” as it measures how much people are willing to hedge against the S&P. As you can imagine, the VIX shot up with the recent bank scare but has been coming back down again recently. The market has decided very quickly that the banking crisis is no longer a problem and they just aren’t all that worried. Similarly, the ICE Bank of America Merrill Lynch MOVE Index (^MOVE), considered the “VIX of the bond market,” showed a big jump during the Silicon Valley Bank and Credit Suisse problems, but has quickly started to come back down. These are two areas where I would buy a call option if they get low enough. I will not buy puts on these because I don’t think this volatility is over. Go to JubakAM.com to follow my volatility and options portfolios.
