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 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.
March 21, 2023 | Daily JAM, Morning Briefing |
On March 6, I bought the May 17 Call Options with a strike of 23 on the CBOE S&P 500 Volatility Index (the VIX) when the index traded at 18.61. I figured that the “Fear Index” was so low that it wouldn’t take much to push it and these options higher. A week later the options were up 116% after the VIX climbed to 26.52. Historically, that isn’t a very high reading for the VIX, which can easily hit 35 to 45 when fear engulfs the market. I’m still holding my June 21 Call Options with a strike of $23. But I’ve been looking for a chance to replay that earlier trade. Somehow (LOL) I don’t think this market is done with volatility.
March 21, 2023 | Daily JAM, Short Term, Videos, VIX |
This week’s Trend of the Week: There is no Trend. When I was filming this video on Tuesday the 14th, the S&P was up almost 2%, the DOW was up almost 1.5%, the NASDAQ was up 2.23% and the VIX, which had been climbing higher with the Silicon Valley Bank collapse, was down almost 15%. Since filming, the markets dipped sharply with the threat of Credit Suisse going under, and have trended slightly upward since. If you’re going to trade in this market, you have to do one of two things. One thing is to be very fast, and trade on the bounces as they show up. The other tactic is planning ahead. Long-term in this market is about a week. A week prior to filming (3/6) I bought Call Options on the VIX (the volatility index) and I sold them on March 13 with a 108% return. On March 14, however, those VIX Call options were down 27%. Talk about volatility! The trend is, there is no trend. Subscribe to my JubakPicks.com to get timely posts on how to keep up with the chaos. For more options and other volatility plays, subscribe to JubakAM.com.
March 15, 2023 | Daily JAM, Morning Briefing, Short Term |
Shares of Credit Suisse (CS) fell this morning–if a 31% drop at the worst moment can be called “falling”–after the bank’s biggest shareholder said it would NOT put more money into the challenged bank. As of noon New York time, shares of Credit Suisse were down 24.1%. The bank’s bonds fell to levels that signal deep financial distress, with securities due in 2026 dropping 17.75 cents to 70 cents on the dollar in New York. That puts their yield at about 20 percentage points above U.S. Treasuries.
March 13, 2023 | Daily JAM, VIX, Volatility |
Back on March 6, I bought Call Options on the CBEO S&P 500 Volatility Index (VIX) at a strike of 23 for the May 17 and June 21 expirations. My logic was that at 18 or so, the VIX was trading at a level that basically ignored all of the potential negative news and trends visible in the financial market for the next couple of weeks. I certainly didn’t count on the collapse of Silicon Valley Bank or the wave of fear that has today overwhelmed shares of every regional and fintech bank. I think the odds are that the crisis won’t go away, but that the extreme fear of today will turn into something less extreme over the next day or so. Fear tends to work like that in the financial markets: When investors and traders discover the sky has fallen today, they get more optimistic (not always reasonably) about tomorrow. So I’m selling the May 17 Call Option on the VIX that I bought on March 6. The purchase price that day was $$94 per contract. The price today closed at $420 per contract. That’s a gain of 116%.
March 12, 2023 | Daily JAM |
Truthfully no one knows what’s going to happen as a result of the collapse of Silicon Valley Bank. Expect a lot of volatility, though, as the “smart money” tries to talk specific scenarios (watch out for shorts bearing expert commentary) and as the most likely scenario shifts from hour to hour.
March 6, 2023 | Daily JAM, VIX, Volatility |
The CBOE S&P 500 Volatility Index (VIX) has dropped back near 18–the index was at 18.50 as of noon New York time on Monday, March 6–despite what looks like a month or two of potential volatility ahead. So, as of this morning, I’m buying Call Options on the VIX for May 17 with a strike price of 23 (at a cost of $197 a contract) and on the June 23 contract with a strike price of 23 (at a cost of $254 a contract) for my Volatility Portfolio.
February 26, 2023 | Daily JAM, Morning Briefing |
The so-called fear index, the CBOE S&P 500 Volatility Index (VIX), just isn’t very fearful right now. In spite of all the negative talk from Federal Reserve officials, Wall Street figures like JPMorgan Chase’s Jamie Dimon, and various and sundry economies, stocks just aren’t showing much fear right now. Oh, sure stocks fell this week but the VIX didn’t show any big rush to hedge downside risk
December 26, 2022 | Daily JAM, Morning Briefing |
I vote for the latter–even though I acknowledge that the VIX, the CBOE S&P Volatility Index (VIX), which is supposed to track expectations for short-term volatility in the market, is behaving very strangely lately. The VIX is supposed to climb along with fear in the market as investors and traders step up to buy options and futures, even at higher prices, in order to hedge risk. But even as stocks have struggled in December the VIX has tumbled. It was down another 5.01% today to just 20.87.
December 23, 2022 | Daily JAM, Morning Briefing, Videos, VIX, Volatility |
Today I posted my two-hundred-and-nineteenth YouTube video: Fear Is Still on a Holiday Today’s topic: Fear is Still on a Holiday. This is a peculiar market for many reasons. Stocks are sinking, but volatility fear doesn’t seem to be rising. On December 20, for example, the S&P 500 fighting a 5-day losing streak. Havens of safety were getting smaller. Pharmaceuticals and airlines, which have been strong recently, sold off on December 19. Searching for glimpses of green, like Coke (up just .14%) in a sea of red is getting harder and harder. What’s curious though, is the VIX, the CBOE Volatility Index, better known as the “Fear Index” remains on the average to low end of its recent and historic range. their recent range. The VIX tracks prices for options and futures on the S&P, so as people, in fear of a downturn, hedge by buying “insurance” against a market drop, the VIX rises. But right now we’re seeing a market that truly stinks–that’s a technical term, I know, but you can Google it–while the VIX remains low, showing little sign of fear. My explanation is that at the end of the year, investors aren’t looking to hedge against a market they still hope will turn around. The VIX is an interesting short-term play here. Buying a Call option with a 60-day out as the market returns to fear, or rationality, in 2023 could be the way to go. I’m going to check on the up-to-the-minute price action and see if the Call option is attractive here. Look to my paid JubakAM.com and my free JubakPicks.Com sites on Friday for a buy or not.
