Volatility

One Way To Trade Ultra-High Volatility

One Way To Trade Ultra-High Volatility

It’s not hyperbole to say that this is as crazy as the financial markets ever get. There may have been more shocking news items in 2008 (Lehman going bankrupt), but the huge daily swings we have seen in stocks and other asset classes are unprecedented. A market that has frequent, huge swings in prices is […]

Trade of the Week: Financial Sector Stocks

Trade of the Week: Financial Sector Stocks

With stocks in a bear market and potentially more selling ahead, the Fed has cut interest rates to 0% and started a new $700 billion quantitative easing program. This could cause a substantial amount of volatility in the market, but especially in rate sensitive sectors like financials. In fact, a trader just bought a large […]

Trade of the Week: Volatility

Trade of the Week: Volatility

The market sold off sharply this week into correction territory on fears of the global impact of COVID-19. Options volumes were through the roof as expected as traders and investors rushed to get in and out of positions, including hedges. Volatility soared, with the VIX (S&P 500 volatility index) trading at 2-year highs. A popular […]

Stocks Are Plunging – Is Gold The Right Hedge?

Stocks Are Plunging – Is Gold The Right Hedge?

When the stock market does its best impression of a swan dive, it tends to come from an unexpected catalyst. It’s generally not something about interest rates or corporate earnings or jobless numbers. Those factors matter over time, but they don’t usually cause sudden, severe moves in the market. No, very large selloffs often come […]

Is The Low Volatility Market At An End?

Is The Low Volatility Market At An End?

2019 can be roughly divided into two market regimes. There were periods of high volatility and market choppiness, notably in June, August, and early October. Then, there were the stretches of low and falling volatility – January through May and mid-October through the end of the year. It certainly seemed like January of 2020 was […]

Trade of the Week: Unusual Options Activity in Volatility

Trade of the Week: Unusual Options Activity in Volatility

There recently has been an unusual amount of options activity in iPath S&P 500 VIX Short-term Futures ETN (VXX). VXX is a popular product for trading short-term market volatility. The ETN tracks the first two futures of the VIX, which measures volatility on the S&P 500. With bullish news from the Fed and a potential […]

Every Time This Stock Goes Up $1 This Trader Makes $1.2 Million

Every Time This Stock Goes Up $1 This Trader Makes $1.2 Million

One of the more intriguing investment stories in 2019 was the huge jump in government bonds prices. Long-term bonds, in particular, soared higher for a substantial portion of the year, outperforming stocks – and with lower volatility. Stocks have since caught up with and passed bonds (year-to-date), but from a risk-adjusted perspective, bonds have arguably […]