As 2014 continues with the not much happening award, there are some big mark downs going on in the volatility markets.? Stocks are sitting around, but volatility in the volatility products are hitting some very low levels.
Take VXX turning in 38% implied volatility with NFP still to come on Friday.? It feels like paper has all but taken out the possibility of a move in VXX for this week.
LivevolX (r)?www.livevol.com
VIX cash is still hovering around 13.45, but the market is only turning in 7% HV over the last 10 days.? I truly wonder if this is the end of the big volatility moves in front of the Fed or a big employment number.
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LivevolX (r)?www.livevol.com
I don?t wonder enough to actively short this volatility at these low levels, but this is a steep mark down.? The only thing that will really shake the market at this point, even for a short time, is a big jump in interest rates.? Big NFP numbers can still make that happen sooner rather then later.
The Trade
Think about scaling in buying a few VXX just OTM calls in the Jan ordinary cycle.? Dump them into Thursday?s close.? VXX puts might become a nice buy then.
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