Investors and traders don’t have just the volatility from the CPI inflation report tomorrow to worry about. An unexpectedly strong or weak inflation report could send stocks and bonds soaring or tumbling. There’s also the expiration of options on the CBOE S&P 500 Volatility Index (VIX) tomorrow.
Anybody still think that conferences, especially biotech conferences, don’t move stock prices? Shares of Nektar Therapeutics (NKTR) are up 7.65% today to $61.79 as of noon New York time on the company’s appearance at this week’s J.P. Morgan biotech conference. The slides from the company’s presentation today are in circulation but CEO Howard Robin doesn’t actually present until 2 p.m. New York time today.
Will bank stocks in general–and shares of Bank of America (BAC) in particular–take a hit when they report huge fourth quarter “adjustments” and create an opening for a call options play on the 2018 earnings story? Bank stocks have been soaring on the belief, first, that the election of Donald Trump, would provide them with substantial relief from costly regulations and, second, on the belief that banks would be big winners from the tax bill that is now so close to passing Congress. But, to get to those golden days in 2018, banks first have to pass through a fourth quarter from hell. Adjustments to earnings–as result of provisions in the tax bill–will take billions out of bank earnings.
There’s certainly no visible sign of a big surge in stock market volatility. Yesterday, when the news was full of threats and counter-threats of war with North Korea and when the tech sector dropped, the CBOE S&P 500 Volatility Index (VIX) climbed all of 12.2%. Today the VIX has retreated, falling 0.98% as of 3 p.m. New York time to 10.11. But this doesn’t mean nothing is going on in the volatility market or that big money traders aren’t placing bets on a spike in volatility.
Wow. That sure didn’t work the way I intended. Back on May 23 I added the July 21 $140 calls on Incyte (INCY) to my Volatility Portfolio. Those calls traded at $7.10 that day. As I wrote in my post that day, to make money on these options, I’d need to get a move of $4 or so to move the share price above $140 and to move the options into the money. My logic at the time was pretty simple.
