On this episode Mark is joined by:
- Andrew Giovinazzi, The Option Pit
- Jim Carroll, Ballast Rock Private Wealth
They discuss:
- The latest in the volatility markets in the US
- How the upcoming Trump presidency could impact volatility
- The international volatility market (VSTOXX)
- Interesting trading activity and developments in VSTOXX, VIX, SVIX, UVIX, UVXY and VXX
- VIX and VIX futures term structure
- Their Crystal Ball predictions for VIX and VSTOXX
- and much more…
Brought to you by Eurex and Public.com
TRANSCRIPT
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And now it’s time to take a deep dive into the world of volatility.
It’s time for Volatility Views.
All right everybody, that music means we are back.
Once again, it is Friday, it is noon central, it is 1pm Eastern.
You know what’s popping off in Voltown?
Well, let’s find out together, shall we?
It is time once again for Volatility Views, your premier program for volatility traders.
My name of course, Mark Longo from the options insider.com.
Couple things to remind you of right here at the top of the show.
Hey, if you’re not listening to the full network, man, you are missing out.
Nearly a dozen other programs.
Been hitting on Vol on a lot of other programs.
Crypto check.
A lot of Vol going on there.
Futures rundown, man, VIX pops in there all the time.
It seems like these days talk Vol nonstop on this week in Futures Options out there.
So if you, of course the option block.
So really it’s a whole network full of Vol these days.
So if you’re not listening to the other shows and you know who you are, hardcore VolViews people, then you’re really missing out.
And of course, speaking of missing out, if you’re not part of the pro, you’re literally missing out on some awesome stuff.
I will be joined right after the show by our good buddy, the Oracle of New Hampshire, Mr.
Matt Ambrison guy can’t get away from unusual activity.
He’s talking about slinging strangles, all these crazy things.
How is all that working out?
What new crazy?
What was that crazy name you came up with yesterday on the option block?
It was bonkers.
The premium harvesting one paying ridiculous premium every ridiculous dividends every month.
You got to check that out.
The options insider.com/pro is the place to go to hear that as we go around the horn.
See who’s joining us on the old program today.
First, let’s go out to the dark, the stormy shores of Maine, the perfect place.
Dare I say it, the perfect layer for the dark Lord of volatility to rest his head and hatch his evil schemes.
Yes, we are joined once again by the rock lobster, AKA the dark Lord of all Mr.
Andrew Jivanotzi.
He’s the one single handedly driving this market down today.
Mr.
Rock Lobster, it is quite fitting that you join us on the show today.
You know what?
It is a pleasure to be here.
We do kind of have a dark and stormy market day.
We will dig into it.
I don’t want to, I don’t want to, I will tease the listeners to continue to follow a little bit of a tease as we also find out who’s joining us holding down the year X hot seat, which means he has to talk nothing but international vol for a full hour.
None other than our old pal, Mr.
Jim Carroll from ballast rock private wealth.
Haven’t talked to him in a while for the better part of this year since back in March of this year on volume.
So it’s been a while, Mr.
Jim.
Welcome back to the show.
It’s not possible that it’s been that long.
Well, you know, they kept trying to book you and I was like, I think we’ve had our fill of that Jim guy for awhile, but you know, they finally overruled me and you know, the producers have the true power here at the end of the day.
I’m just the voice on the microphone.
So they decided it was time to bring you back.
So I had to agree as we keep on rolling right on into the volatility review.
It’s time to break down the latest developments in the volatility trading world.
It’s time for the volatility review.
All right, everybody, welcome to the vol review.
The portion of the show we do just that we break down.
What the heck is lighting up the tape out there?
And man, if you were waiting for a little vol to pop on your radar, if you were maybe bored by all this green on the screen and this vol annihilation, if you were having PTSD flashbacks of the beginning of 2017 when Trump took office and vol went to die.
Well then today is your Huckleberry listeners.
The market’s no longer green pretty firmly in the red S and P off over 80 handles today.
Almost one and a half percent about 1.4 percent right now.
The NASDAQ off two and a third percent Dow off three quarters of a percent.
So just no sooner do we kiss 6K in the S and P than we wave it bye bye back below 5900 actually closing in.
Did we get to 58 half today?
Let’s see.
We’re threatening the 58 half level out there about 58 58 60s range right now.
Listen, let’s see.
Do we get now we didn’t get quite that the 5861 was the low.
But so we who knows at this rate, we might break through it.
Later on today, a lot of red on the screen are old pal small caps not immune as well off nearly one and a half percent out there today.
So just a a drubbing across the board NASDAQ, of course, taking the bit in his teeth off two and a third percent.
All that red on the screen means some welcome green on the vol screen again, unless you’ve been playing a lot of downside, which some people have been, which case maybe not so happy out there.
But hey, you can’t be mad.
You’ve had a good run over the past week and a half.
Vicks cash getting a little frothier again.
We were playing with a 13 handle.
Yes.
I think we got to the high 13s yesterday, which is just crazy town out there outside of let’s say December or the dog days of summer today.
Not so much 1675.
So feeling good and frothy again today.
That puts it up exactly one and three quarters points from where we were this time last week.
And obviously markedly higher than where we were yesterday in Vicks land.
Let’s just see yesterday.
Hello.
Hello.
Did we go yesterday?
We got to 1366 listeners.
So my goodness, they were coming for vol.
But you know, it always surprises me when they come for vol that aggressively the day before Friday, the day before we really start taking the weekend out because you still have a whole day to go.
Actually Powell throwing a little bit of monkey wrench into the works out there today.
Powell not going down quietly.
He’s going down swinging, taking the whole market with them.
Vvix 108 up a whopping 20 points.
So just when you’re starting to think maybe vol of vol season is done, vol of vol, stick a fork in it.
Nope.
Roaring back to life today.
Up 20 handles to a 108.
So a lot to unpack.
Jim, you picked a perfect time to come back on the show after your nine month nearly hiatus.
Before we get to today’s action, we had a great vol spectacular last week on election night.
A lot of great guests joining us from all over the globe.
We didn’t have you on that show.
So let’s start there.
Walk us through your reaction to just the whole election madness.
The markets rallying day of, day after, day after that, vol getting taken to the woodshed old yeller style and now roaring back to life today.
What the hell’s going on?
I think we have a title for the show.
What the hell’s going on?
You know, it was a classic event, all set up, right?
You’ve got this seemingly binary event, this election.
We’re teetering on the edge of our chairs.
Who’s going to wind up in the White House and a fair amount of hedging going on.
The VIX term structure was flat as a pancake, less than one point from the low to the high across all the months.
And then boom, the event is concluded.
And I’m not sure that the vol crush would have been significantly different had the outcome been the other direction.
I think it was a massive sigh of relief.
Now clearly, had the Democrats taken that White House, there might have been a little bit of civil disruption from Trump’s followers.
So we escaped that.
But you know, the magnitude of it, I think was clearly kind of a pro-Republican pro-Trump vote.
But man, we have kind of reversed it fairly quickly with yesterday and today.
So is the honeymoon over already?
That was a short honeymoon.
They didn’t even really get officially married yet and the honeymoon’s already over.
He hasn’t even stepped into office.
But you’re right.
You know, I kind of was wondering that myself.
If the election went the other way, let’s say it was resounding for Harris, would the results for the market have been markedly different?
You know, there was that old adage, it used to be Republicans were good for the market, Democrats were bad because one had different spending.
They both spend like drunken sailors now.
So I don’t know if that adage even really holds water anymore.
So I think you’re right.
I think it was mostly relief that A, this thing was over and B, that it wasn’t torches and pitchforks, right?
It was a relatively at least seamless, it appears to be on the surface, a transition, which we haven’t had since the last time this happened, which is which is interesting to see.
Mr.
Mr.
Rocklops, you did join us, I should say, on the election.
Nice, spectacular.
So an intriguing vival annihilation.
I know you were like me.
You had a bunch of 17 puts in your back pocket going into the election.
So you probably did pretty good on those.
But now we’re seeing a little bit of chop, a little bit of churn, maybe a little bit of blood in the water out there again.
What’s catching your eye in the vol markets today, sir?
Yeah, I did something I don’t normally do.
I closed them all yesterday when Vicks traded in the 13 handle.
So I’m actually I’m kind of happy today.
You waited a long time.
I took mine off a couple of day or so after day.
I took some off the first day and the rest two days later.
I was I’m taking my money and going.
Yeah, I definitely I closed everything in November yesterday.
I’m like, OK.
And normally what once you get in kind of like the zone one area when you’re starting to tickle it, I don’t like it when the vol trend stops going down and I’m like, OK.
And then my my patience for holding them gets real short.
Like so VIX is 16, like 17, 16, 15.
I can you know, not that big a deal.
Once OK, 15 now 14, once or 14, especially when you haven’t seen the 12 handle in.
Three or four months, it’s been a while.
There’s no there’s no lock that VIX gets back to the mode to 12 and that that straddle was 30 days.
Straddle is getting down to about a buck 50 and SPX and like, yeah, I don’t you know, I would even have given it like, you know, every every every FOMO personal world that missed, you know, the rally.
You know, could take SPX up 150 points easily.
So anyway, so I did close all my notes.
I was kind of happy about that.
Now I’m looking at kind of December is starting to look OK.
There’s some interesting plays there.
But as far as the election goes.
Um, you know, kind of if Harris was elected, I think Val would ended up going down.
But I think we might have had maybe the market sells off a little.
I mean, the reality is whoever was running the administration now is probably going to be running it when Harris is there.
You know, people can argue about that.
But I since I didn’t hear anything different on the campaign trail necessarily, I’m just assuming the same.
And stocks did OK.
But at the same time, we’ll we’ll you know, we’ll see how it all plays out.
I think part of this also is, you know, there was some pretty euphoric good feelings here right away.
And it appears I’m not going to say this yet.
But I feel like, you know, there’s a OK.
So Trump didn’t get his the guy he wanted for running the Senate, which was Scott over that soon guy, which he just looks like the classic politician dude.
So there’s like that that first kick.
And then then there was some bandied about like, you know, Congress is just going to pass some ridiculous spending bill before the end of the year.
And you hear that.
And it’s you know, you we are disappointed in politicians in general.
And then you hear that and I’m like, you guys just you know, you suck.
You basic I’m sorry.
You just suck.
Democrats suck.
Republicans like you guys suck.
If that’s how you’re going to play this.
And then, you know, there’s clearly people voted for, you know, some kind of rational spending program.
I believe at least the majority of voters did.
And then Congress is like ignoring you like for for what purpose?
I don’t know.
I guess what is it?
A giant money laundering scheme at this point.
So little disappointing.
Now I fully understand government spending is economic growth, although you have to look at how many jobs were added to the economy in the last few years and how many were government jobs that we continue.
We’re going to have to raise taxes to pay for those.
So you’re you know, I would like to see some.
I would like to see things continue to move in the other direction.
Congress can surprise me.
This Thune guy can surprise me.
I’m willing to be surprised.
But right now, until they actually do something useful, I don’t believe them.
So we’ll see what that what that comes out.
I think that’s kind of part of, you know, and I don’t blame Powell.
Like Powell did the hard thing he was supposed to do.
They screwed up on rates early.
I think we probably all this, at least you and I and probably Jim agree like you guys kept in too low for too long.
And you pile a bunch of spending on did all kinds of whatever crap and you end up with inflation just like Milton Freeman said would happen.
I’m teen times.
Now we’ve got this.
And now Powell’s like I did the hard part.
I jacked the rates up.
Right.
I tanked the market when I needed to.
Okay.
Now we’re pulling the rates back a little bit because inflation looks like it’s not going up as much as it used to.
But it’s starting to percolate a little more again.
Of course, government spending is out of control still.
And he basically I think yesterday is a reminder.
He’s like, listen, the job is not done.
And why he just can’t say as the Fed chair, you guys are spending too much money like drunken sailors.
Like can he at least say it once?
But I guess, you know, we elected some people and let’s see if they say it, you know, and Trump himself is not like a let’s not call him a fiscal hawk.
He certainly wasn’t his first term.
I think he tried and got thwarted pretty hard.
And then he just ended up passing a bunch of ridiculous budgets.
So the spending thing now I would I would argue again, we were at all the word down what 2% from all time highs.
We were like just 6,000 or that 150 points, 3%.
So at least for right now, I would say the market, the bond market is like, OK, you guys have to start putting up because they’re going to press rates.
And I think that’s kind of where we are now.
You know, stocks, companies are performing, making money.
We have Nvidia next week, which again has been a vol event now every quarter since Nvidia became so big.
And I think as it should be right, it’s the market leader as far as stock price growth and all that.
So I think at this point, like, OK, Powell is like, OK, guys, I’m done.
I’m not lowering rates anymore.
You guys need to do something now.
And it and I have to say, like, this is it’s not like giving Michael Jordan the ball.
Like you give that guy the ball, he’s going to do his job.
Congress right now kind of has the ball.
And at this point, I don’t trust him, but I can be pleasantly surprised.
And that’s what I’m waiting for.
So if you see a little bit of that, I think, you know, VIX is 14 by Thanksgiving.
But it’s I think it remains to be seen.
So it’s kind of a wild card, I would say.
A wild card.
Indeed, listeners, as we roll out now, pun intended to the land of the volatility surface and surprise, surprise, it’s looking a little bit firmer, a little bit frougher out there this week than it was a week ago.
In fact, we had to just re-rack this right now because things are moving and shaking out there as we’re coming into the start of this segment.
Listeners, we’re seeing obviously a firmer front portion of the curb that no future up nearly one point seven points now from where it was this time a week ago.
The D’s future up nearly a full point about point nine out there.
So looking frothy, looking firm.
Again, we like to use that barometer of is there a 20 handle anywhere in the offing?
Those are kind of hard to find right now, listeners, given the fact that we have annihilated vol across the board.
But if you go look and if you go fishing listeners all the way out to July of next year, you can find an 18 and three quarters or so.
So you’re starting to get back into the ballpark of sniffing a 20 handle.
That’s mostly thanks to today’s action out there with the curve firming up pretty aggressively across the board.
Mr.
Jim, you made the rookie mistake, dare I say it, of tweeting out a graph of the term structure yesterday, right before all this madness changed and the term structure changed markedly.
First off, you should know better, sir.
And then B, what’s catching your eye out there today?
It is all my fault.
An early celebration of a return to modest contango.
You know, look, we spent how many months before the election with the fixed term structure just woefully flat and relatively low.
So it’s time for a little excitement, I gather.
But I also pointed out yesterday and just reiterated out there on the X that the November contract expires next Wednesday morning.
So it will behave very much in line with spot vics between now and then.
And that’s what we’ve seen today.
We have spot vics up almost three handles.
And that’s lifting November above deuce.
So everybody’s freaking out a backward nation.
Well, you know, that’s the way it’s going to be until at least next Wednesday.
You know, it’s it’s what I refer to as a punch in the face.
If you came into the morning, short volatility, backredation.
If you’re the the once and future doctor, Vicks, and you say that term, folks will call you all sorts of mean names.
Who knew backredation could be such a contentious thing?
But that’s where we fall right now in the in the Voll service.
And I joked with you earlier, Jim, but we have that problem all the time here.
Even on this show, we try to take a snapshot of the Vicks futures.
Let’s say, oh, when the show starts and even just a few minutes later, when we’re talking about the the Voll surface, it’s already changed completely.
So if you once you tweet out a graph, Jim, all you’re doing is asking you for trouble on the Vicks.
They are just a high inflection asset, to say the least.
Mr.
Rock Lobster, a.k.a. the Dark Lord guy who’s ginning all this up behind the scenes.
What’s catching your eye out there in a mostly firmer, mostly higher Voll surface this week, sir?
Yeah, Jim just mentioned.
Yeah, we were in that happy contango.
I was like literally twenty four cents away from the option pit fair value for Voll.
We do kind of this this funky thing where given so many days to expiration, what is an average Vicks curve look like?
And this is all by I’ve did my observation.
So kind of the old school way.
And we were really close for a while this week to getting to that spot.
And we didn’t quite make it.
So now, yeah, you’ve got the December contract is lagging under the cash.
And the November contract above.
So you still like it’s one of those things where it’s the front end is flat.
And when the front end of Vicks is flat, I assume that Vicks really wants to move up or down.
The deeper in a backwardation we go, the more I assume Vicks wants to climb.
And the deeper into contango we go, the more I assume Vicks wants to go down in the short term.
So then I say short term like the next week or two and long term 30 days and out.
So and that’s kind of what we got.
It’s kind of what I would say flat and it should be.
So stocks are you know, we’re down one and almost one and a half percent.
So that’s like 24 of all.
And so everything I would say is at least reasonably priced.
And given that we kind of sold off yesterday.
So I think so again from a front end point of view.
And I would say at this point it would not surprise me if 14 or 20 plus is in the cards by Vicks expiration.
Then they know November expiration.
So I’m that’s that’s kind of where I am on that.
It’s a pretty widespread there.
I know.
It’s like the thing is I would I the flatter we are the more I think the strangle and Vicks is undervalued.
So that’s kind of how I trade it to be quite honest.
So that’s what I’m doing right now.
Like today I I’ve been unwinding spy put spreads and I’m about to start unwinding upside Vicks call spreads.
So to expose the downside again, it’s just that we’ve made the move.
But if if I’m adding more positions on Monday and the curve is flat, I would just you know, I would buy more Vicks strangles again.
So that’s that’s how I trade that.
I know everybody kind of does it from a different everybody has a different perspective about it.
But like I don’t buy strangles or a strangle like I would be doing now when Vicks is in huge container.
Although I I buy in the money puts and I’ll buy junk Vicks calls against them.
But I guess it’s how how how short a delta.
So right now I think it’s I think it’s better to have like gamma in the vault products, not necessarily a big delta in the vault products.
That’s I would say it like that.
So would those be your strikes then 1420 on your strangle?
If I was doing this strategy, so I’m doing this strangle for December.
No, I would I would be closer actually, Mark.
I’m gonna say it’s not getting you much 14 gets cheap.
Yeah, getting up the strangle now like the December 16 puts only a dollar 30, which is really cheap like the 16.
So you could buy the 1619 strangle for 270.
Right.
And that strangle was almost 100% in the money a day and a half ago.
So I would just buy that strangle straight out.
Now granted right now I’m trying to unwind my the last of my upside November that I have mostly because I’ve already sold my VIX put so all that stuff is I own for a huge credit.
So I just want to get what I can for it.
But like on Monday, I would revisit this if the curve is flat.
So right now I priced the strangle around $2 and it’s it’s trading 260 probably 265.
And it was near that, you know, and VIX got to a 1360.
So in my when I view it like that, it’s way too cheap, in my view.
So I’ll just buy a gobble of those on Monday.
Now, if we don’t have the continuation, that strangle would still leave me slightly short delta, which is fine.
And then see what happens.
Now I might the only thing I would do that is switch to maybe a call spread, try to lighten the cost and get the strangle down to below $2.
And then like so it’s ridiculously low for where VIX is right now.
And again, in my view, that’s where the edge is in a when the curve is flat at 17 is a lot different than when the curve is flat at 22.
So you actually have, you know, like real upside like what are the the brothers say they’re like you make your money above 20 and below 16.
In VIX that kind of 16 to 20 is hard to make any dough.
So when they’re giving you the upside for relatively little dollars, it’s I think it makes a good risk reward set up.
And that’s that’s how it is right now.
So today I have to concentrate on closing the stuff I have to book the dough.
But by Monday, if we are here still, and the market hasn’t changed tone, then I’ll just I just start the regime up again for the month.
And that’s how I would do it.
So so you’re right, Jim, it is it is a wide range.
But you know, they’re they’re giving me the three dollar range till December, which are two dollars and 70 cents for it.
I just don’t think that’s very much money.
But again, that’s my my my view on that.
I think 1619 a little tighter.
I think we can get behind that.
Mr.
Jim, what are your thoughts on that strangle?
A and B, I saw you just tweeted out a warning to folks about the futures and VIX cash kind of moving in lockstep.
Do you want to share that with the with the listeners, sir?
Well, yeah, it’s it goes back to what I was talking about earlier.
You know, the with with the November contract expiring in Wednesday morning next week, it is going to follow spot VIX like a puppy dog between now and then.
And so the big move today is in spot VIX.
And that’s going to lift that contract.
So we we’ve gone from yesterday looking like relative calm had had come back into the picture to this little upset today with with stocks getting shellacked.
You know, that’s pushing spot VIX meaningfully higher.
You know, it’s still under 17.
So it’s not like, you know, the the house is on fire quite yet, but it’s a significant move from where we were and where I think most people thought we might be headed.
And so every tick in spot VIX is going to be matched with a tick in that November contract until it goes away next Wednesday.
And then we get to start over and see what December wants to do.
And what we want to do, listeners, is look beyond our shores for a little bit of international volatility.
It’s time to explore what’s happening in the volatility market beyond our shores.
It’s time for the international volatility review.
The international volatility segment is brought to you by your ex home of Euro stocks, the stocks, DAX and the German government bond based Eurobund Euro bubble Euro shots derivatives.
Your ex is the leading European derivatives exchange.
Learn more about trading V stocks, futures and options.
The European volatility benchmark at www dot your ex dot com slash V stocks.
All right, everybody, welcome to the international volatility review, the portion of the show where we cast our gaze beyond the shore.
See what’s popping off over there in the Euro zone in particular, drilling down on a little product we call around these parts.
V stocks and V stocks looking a little bit frothier than it was this time a week ago.
Was that nearly 17 and a quarter when it closed this morning?
1721 that puts it up nearly half a point about point four four from where it was this time a week ago.
Now, obviously, this closed a few hours ago.
So at the same time, VIX cash was hanging out probably around 15 and a quarter somewhere in that level as well.
So VIX hadn’t really kicked into high gear either.
So I’m sure of V stocks.
That’s one of the challenges of sharing and comparing apples to apples with these listeners.
By the time we kick off the show here, of course, V stocks has already been closed while VIX cash continues to rampage as we’re seeing it out there right now.
Frame of reference, of course, we’re not even halfway to the 52 week high, which actually a little bit over halfway to 52 week high, which was a little bit north of 31 back on August 5th.
I think you can all probably guess the day that V stocks made its high below mid December.
In fact, exactly mid December of last year, 12/12 back on December 15th.
Think we can threaten that again?
Well, today’s action would say no.
But of course, mid December, an eternity in the vol space, literally anything can happen between now and then listeners.
Speaking of what’s happening out there in V stocks this week, listeners, we have been seeing a lot of paper.
So if you’re intrigued, you want to watch this stuff, there’s a couple of great ways to do it.
You’re ex dot com.
That’s a place where all things V stocks are held or of course, tune into the show.
We break down a lot of the flow for you as well.
If you’re really interested, hit us up.
We can add you to the mailing list as well that your ex puts out, which has all of the great flow that’s going down here in V stocks for the week.
And it is pretty informative.
If you had that, you’d see there’s some flow out here in V stocks land.
That’s not quite the same.
It’s not quite apples to oranges as what we see in VIX land.
And that’s what makes it so interesting to me.
Let’s start out here.
You know, you have some of the trades you’re going to expect.
Like I was talking about myself and the rock lobster loading up on nove 17 puts and VIX heading into the election.
He just took his final ones off yesterday.
I took mine off last week.
Someone did the same thing last week in V stocks as well.
They bought 10,000 of the D 17 puts.
However, it was markedly after the election.
It was last Friday, exactly a week ago during our showtime on November 8th.
So kind of a late time to be buying that vol downside.
I mean, it still probably worked out at the end of the day, but kind of the train I think you’d want to have on a little bit earlier in the cycle.
Like let’s say, I don’t know before the election itself, vol already took a pretty good drubbing by the time we got to Friday of last week.
Today not looking so great on that, obviously.
And then of course the same day just to show the kind of two sided flow we’re seeing out there also saw a 6,000 of the DS 28 34 call spreads.
Also our friend, the one by two put seller is back and I kind of want to get your thoughts to Andrew and Jim about this as well because this is strategy we talk about a lot in VIX, but the other way we see people all the time selling the one by two selling one call and then buying two or these days buying three, four or five of the upside.
Just look at all of our open positions in VIX options and its size upside.
Most of it on these ratio type spreads.
And yet we’re seeing a lot of the other way going up in V stocks these days.
We talked about a lot of it a few weeks ago when Mr.
Rhodes was on the show with us.
He’s been tracking these one by twos.
I think we had our friend come back again.
I’m pretty sure these are the same strikes off to go out and see even though he was doing it in November before.
Then now it is the December 17 15 one by two put spread one up just a few days ago.
Looks like they did it 2000 by 4000 times.
There probably more going up after that.
So size one by two put spread.
Obviously if you’re doing that listeners, you want vol to crater to fall out of bed fairly aggressively.
So far not exactly looking great, but time is on his side.
He did do this out in December.
I’m curious for you.
Maybe Jim will start with you.
This is something we talked about a little bit before on the show, but for whatever reason, not a strategy we see going up a ton in VIX and for whatever reason, folks really seem to have embraced it in V stocks.
What are your thoughts?
And don’t we see more of these really aggressive ratio put spreads in VIX?
Andrew’s probably better positioned to talk to that than I am.
You know, I think I imagine that there’s not a lot of crossover between the folks who are actively trading V stocks and the folks that are trading VIX.
So you’ve got a little bit of a different geography, a little bit of a different mindset that has to play into that.
Playing downside in VIX or V stocks, any place that you’re betting that volatility is going to go away, you know, has a positive expected return punctuated by severe bloodletting.
So whether it’s V stocks or VIX, you know, getting aggressive on the downside has a price that will be paid occasionally.
Mr.
Rocklopsey, you will like this and maybe not like this on our show last week during our showtime.
Someone did the reverse of the trade you were just talking about.
They blasted away on the 1420 strangle.
They did it a thousand times tied to short V stocks.
You like your trade the other way, sir?
How about that?
So they sold the strangle and then sold the V stocks?
Yes.
Yes.
Well, those trades work great until they don’t.
I guess.
Yeah.
And they’re like that.
I’d rather.
Yeah.
That’s a, I don’t know.
I don’t, I don’t know if I like that at 14.
I think it’s a better trade at like 22 or 24, you know, something where there’s a little more meat on the bone that you’re selling.
But hey, as you say, say lovey to each of them.
So anyway, I’m not my favorite.
No, but the one by two, like, you know, you, a one by two put spread in VIX like buying two selling one.
I think that’s like an impossible trade.
Very hard to make those pay.
The one by two call spreads, I don’t think are work better in VIX because you know, they’re generally long Vega.
So I think those and those do work.
Just kind of depends how you structure them.
But, and then we’ve seen some of those crazy, like four by ones and stuff like that that go up as well.
And I can never exactly figure out which way they’re doing it.
But I could have sworn I saw one go up prior to the election.
That looked like kind of a Vega sale to me way out.
But anyway, but as far as those go, I don’t know.
Sometimes trades look good on a risk graph, but in practicality, there’s a lot of, there’s a lot of lazy deltas in them.
So you get one side performing and the other side isn’t quite performing, which is what I would just kind of caution people on that kind of performance.
So you get that squared away.
But that’s a pop and toms trade.
You’re selling that strangle and you’re selling the underlying against it.
You just don’t want to sleep at night.
That’s all.
Yeah.
Or you have been indoctrinated into thinking that just selling the vol always works.
Maybe you did it after August 5th and you’re like, wow, this is the easy way to make money.
And it was because that was 100% right.
But you get more aggressive when VIX is lower.
It’s a little stickier of a trade.
So like the long-term capital guys come to mind, what are they, they went like how much one year Vega do they sell at 13?
It was a huge number.
I mean, I date myself.
So as Jim and I, I don’t know how many hundreds and hundreds of thousands or a million Vegas they sold.
So because they only looked at data back to 1992 for some reason.
So they did a vol study only going back to 1992.
How they missed the prior decade of volatility trading is beyond me.
When genius fails.
But anyway.
Well, you know, it was hard to get that data.
And so, you know, it’s sort of like academics.
They find a set of data that they can torture until it tells them what they want to hear and publish a paper.
So exactly.
Yeah.
And then they’re like, oh, wow.
This is a data works great.
What could possibly go wrong?
What could possibly go wrong?
Indeed listeners as we keep on rolling out to the land of all things VIX options is VIX popping.
We know VIX likes a little blood red on the screen that tends to get the juices pumping out there and VIX land listeners.
And that is the case again today, just as I’m talking VIX just crossed the one million contract threshold exactly.
So we are popping off again out there today.
Listeners, the ADV is eight thirty nine up about two thousand this week.
But spoiler alert probably going to go higher after a day like today.
What’s open for size out there?
Spoiler alert also it’s a lot of put six to four still in the top ten.
So puts were dominating things.
Maybe that’s also a contrarian indicator at this point.
Once we get to puts outnumbering calls in the top ten out here in VIX land, maybe that is a sign that we have gone too far.
Listeners, maybe that people are blasting away at strangles and the underlying in V stocks.
That’s the bridge too far sign listeners.
Number ten, two hundred twenty nine thousand of the no doubles.
You know, it’s my favorite position on the tape.
Listeners now number nine, two hundred thirty three thousand of the DS 15 puts.
That doesn’t do it for you.
Allow me to present number eight, two hundred thirty three thousand as well of the no sixteen puts.
Number seven, two fifty eight of the no twenties.
Number six, two sixty one of the no seventeen puts.
Number five, two sixty six of the no thirty five.
Number four, two hundred ninety one thousand of the no forties.
Then we’re right back at it all puts all the time.
Listeners, number three, three seventeen of the no fourteen puts.
These are the ones we’ve been contentious for a little bit.
Obviously not looking great today.
Number two, three hundred seventy six thousand of the DS 13 puts.
I was thinking for a while there.
Maybe that was a bit of a bridge too far.
Then we kissed a 13 handle and fixed cash yesterday.
Listeners, so even those bridges can get a little bit closer these days.
And then number one, three hundred eighty eight thousand of the no fifteen puts.
Obviously by the fact that these are all still open and DS means they have not taken these bad boys off, which I don’t know.
We’ll see if this is this turn around, have legs.
Listeners, this just a little bit of a of a fit and start.
We shall find out today.
Action packed day.
One million contracts on the table already.
The big dog today.
Go figure it’s more puts.
One hundred seven thousand of the no fifteen puts followed by number two eighty one K of the no thirteen half puts.
Number three, sixty K of the DS 14 puts.
Number four, forty seven thousand of the DS 16 puts and rounding out the top five on a pretty banger Friday.
Thirty six thousand got some calls.
Finally, all it takes is VIX to move a couple of points.
People start trading some calls.
Thirty six thousand of the no seventeen.
Yesterday listener seven thirty six on the tape.
The big dog.
Fifty one thousand of the Jan 30s followed by fifty thousand of the Jan 50s.
This is an interesting one.
This Jan 30 50 vertical.
I’d be curious to maybe get Jim and Andrew’s thoughts on this in a little bit.
We were talking about this yesterday with our buddy Mr.
Matt from Ora.
It’s an intriguing vertical out.
There was only opening at least for size that we could tell on the 30s.
There is some open interest on the 50s out there.
I don’t doesn’t have the width of a roll down though.
It has the width of a straight vertical.
Number three, forty three thousand of the DS 14 half puts.
Number four, forty one thousand of the no 13 half puts.
And number five, thirty six K of the DS 15 puts.
Wednesday another banger day.
Nine forty one on the tape.
The big dog back to those no 15 puts.
Folks love them.
One hundred twenty three thousand changing hands on Wednesday followed by number two seventy K of the no 20s.
Number three, fifty five thousand of the no 16 puts.
Number four, fifty thousand of the no 14 puts and bringing up the rare on a banger Wednesday thirty five thousand of the no 19s.
Tuesday no slouch either.
A 83 almost exactly the adb right now.
Number one gets you to seventy two thousand of the D 16 puts.
So more puts all the time listeners.
Number two, fifty six K of the no 15 puts.
Number three, forty thousand of the Feb 40s four O’s.
Number four, thirty seven thousand of the no 16 calls and bringing up the rare on an active Tuesday.
Thirty five thousand of the Jan 15 puts.
And lest you think we got out of the gate very lazily this week.
Nope.
One point oh one million contracts on the tape on a banger Monday as well.
Kicking us off.
A hundred thousand almost exactly on Monday of the April thirty nines.
As I recall, that was part of an April one by four, I believe it was.
So again, talking about all these ratios we see for size all the time to the upside and Vicks not so much to the downside.
Why is V stocks the lone player in that?
I’m curious listeners.
Number two, ninety thousand of the Jan 17 is number three.
Eighty one thousand of the no 15 puts yet again.
A hot strike.
Number four, fifty K of the no 16 calls and rounding out the top five here.
Forty seven thousand of the Jan 16 puts.
Mr.
Rock Lobster will start with you.
What are your thoughts on this Jan 30 50 vertical went up about 50 thousand times yesterday and then anything else catching your eye out there in the Vicks paper this week?
You know, it’s fine.
I don’t know about this week, but they’re buying puts in Vicks today.
Just saying.
That is a is a.
They’re buying them today.
I haven’t I haven’t seen a ton of Vicks call paper today, to be honest, but I could be.
I could be totally wrong.
I mean, clearly the volume is huge and they’re buying up a lot of the November.
Like I’m just watching.
Oh, wow.
The no 17 calls have now blown up to a dollar.
The no 20s are 40 bit now.
Even like there’s a bit for these into the close here.
So again, I saw a lot of put buying a hundred thousand of the November 15 puts have traded.
So I think this weekend will be one of those.
You know, are we freaked out about rates or are we not?
Are you saying it’s a Russell’s secret you Vicks weekend trade weekend?
Is that what you’re saying?
Well, of course, yes, you’ll be buying it at the at the perky top.
But what the heck?
Because can I tell you a spoiler alert?
I already did.
This morning.
I’m laughing all the way to the bank on this stuff right now.
I’m loving it.
I would assume that you are.
So it’s definitely a nice looking trade right now.
But you know how I mean, how much how much news is going to come over the weekend or how much of a wall drop by Monday?
You know, not a ton.
So it’s kind of a, I don’t know, it feels like kind of a low risk.
I feel like it feels like a low risk weekend play, to be quite honest.
So but anyway, from a volume point of view, now all of a sudden, you know, there’s definitely there’s a bid for some upside.
So hey, you know, we’ll see.
We’ll see what happens.
Jim, anything catching your eye in the maelstrom of Vicks paper before we get into some of the ETP, sir?
Nothing really catching my eye.
You know, the I think people are still trying to figure out what the post election strategy needs to be.
The and I think there are probably with.
We did hit six thousand six hundred in spy.
We did get to that almighty level.
So it shouldn’t be a surprise that there are some people who look to hedge some of that on the theory that it won’t stay there forever, at least in the near term.
And I go back to how many years ago was it when somebody at the QD conference made the MAGA hat the make volatility great again?
And I suspect that one of the hallmarks of the next presidential term will be that in fact, volatility finds its way to be great again, not necessarily on a sustained basis, but I just wouldn’t be surprised if from time to time, things are disrupted here and there and that markets will fluctuate and opportunities will present themselves to be to take either side of the trade.
That would be interesting.
We have a question of the week exactly along those lines.
Is it going to make vol great again next year?
Are we going to see the the death touch that Trump had for vol last time he took office?
Let’s run through some of these vol ETPs listeners.
S Vicks, your beloved, maybe you hate it, inverse vol product, twenty six ten.
That puts it down exactly two points right now from where it was this time a week ago, starting to see some paper pop off out there.
Forty seven hundred contracts on the tape.
But doesn’t sound like a lot.
That’s because it’s not the A.D.V. is sixty three hundred.
That’s come off quite a bit.
I have said before they have added weekly something I’ve been beating the drum about for a while out here.
So that should hopefully over time improve things.
Right now the markets in those weeklies are pretty rough.
You’re looking at, you know, nickel bid at, you know, two dollars for some of these options.
So so good luck getting in between those goalposts.
But maybe we’ll see a little bit of reverse of that today.
It’s sibling product out there.
S vol up a half a point there on the show not too long ago.
We were talking Russell and I about this product.
I haven’t had a chance to sink too much teeth into it yet in terms of the analysis.
But looking at the recent performance of S Vicks versus S vol just over the last week and a half post election, both starting from a very similar price level.
I think S Vicks was around close to twenty two, like twenty one and a half and S vol is around twenty and a half, twenty ninety, I believe.
And after that, we saw S Vicks pop six points roughly and S vol pop about exactly a point.
So if you’re looking for a performance, it seems like we have a clear winner, at least for right now, certainly from a from a liquidity perspective on the options front, it’s not even close.
If you think the liquidity is bad in S Vicks, S vol is doing three hundred and eleven contracts a day.
And if you’re a player, those things can improve.
I will say the performance over the last week and a half does give me some pause, but I am willing to keep an eye on it and just kind of evaluate how this thing performs.
I need to sink my teeth into the methodology a little longer.
Speaking of methodology, I did mention earlier I did.
I don’t I never do this listeners.
But I know Russell in the past has talked about buying his UVic for his secret weekend trade during or even before showtime sometimes, which usually I don’t like doing.
I don’t like holding a wasting asset in my hands like UVic.
But today it seemed like the animal spirits were with it.
Of course, as Jim was saying earlier, we’re now in this position where the cash and the futures are moving in lockstep where when we’re moving up, that does help lift UVic as well.
So I had the spirit in me about UVic is much lower today.
So feeling feeling happy about that one.
Probably going to ride it through the weekend.
Not going to let it go.
Now, this is definitely an environment where we could have some weekend risk if we don’t have it, of course, can let it fly on Monday.
UVic’s right now for 10 up a third of a point.
If you want more of a deep dive into that fun stuff, stay tuned for oddities where we talk about our trades for the week.
I’m sure Matt will have some thoughts about that fun as well.
Of course, the options insider dot com slash pro the place to go to get access to that right now.
You mix popping off today. 66000 contracts on the tape.
We have not seen this in some time.
So clearly the folks who were looking for UVic to come back to life to trade it again, we’re having a ball, including 11000 of the no fours expiring today.
We do see us a lot expiration day flow in these products like UVic’s is huge.
And we’re seeing that today, especially as we’re flirting through a strike hanging out for 10 right now.
So a dime through that strike folks dialing up those fours hot and heavy out there. 66000 contracts trading today, including nearly 12000 of the fours already and about 10000 of the fours that expire next week.
Mr.
Jim, I just ran through a bunch of stuff.
I’m catching your eye and either as VIX or as vol or UVic sir.
Well, you know, we’ve had a big one day turnaround here because coming out of the election, you know, it looked like it was time to short volatility and we did see a nice bounce in aspects and a bit of a flop in the various long ball products.
You mentioned asphalt and I would draw people’s attention to the differences between as VIX and asphalt.
They do both address the short volatility opportunity.
As fix does it in what I would refer to as a a more concentrated fashion where asphalt does have some exposure to short VIX futures but dials it down very specifically.
So you know, you’re not going to see the same responsiveness from asphalt in either direction that you would from as VIX.
And so people just need to understand that they’re designed to be different animals.
And in fact, you know, the asphalt product is really partially designed to roll positions in the VIX futures and essentially pay out any profit that’s derived from favorable role in those VIX futures.
So you know, the but this today to call today, I think I referred to it earlier as a punch in the face that the punching just keeps coming as as we see spot VIX, you know, move up above 17 and and the VIX futures take it on the chin.
It’s it’s one of those days where if you’re short volatility, you’re not feeling very good.
No, no, indeed.
That’s a good thing to clarify.
I mean, obviously, they’re not quite apples to apples.
And you’re talking asphalt versus as VIX, but people are going to look at them in the same context.
So I like laying out for them.
I agree because that is how people are going to view them.
Should I buy the asphalt or should I buy the asphalt?
Should I trade the options on one versus the other?
So if you’re expecting apples to apples, I just want to make that clear for you out there.
You can look over the past performance over the last two weeks for yourselves.
If you want to see that clearly.
Mr.
Rocklopster, we got to get to the crystal ball, but anything catching your eye and your beloved as VIX or you VIX or anything else out there, sir?
Mostly the illiquidity is a little bit off putting, to be quite honest, in as VIX.
So I would like to see more liquidity in there, a little bit higher quality, but it has yet to materialize.
You know, it has yet to materialize.
Listeners, it’s our crystal ball.
So let’s get to it.
It’s time to peer into the future and reveal what the volatility gods hold in store.
It’s time to look into the crystal ball.
All right, everybody.
Welcome to the crystal ball, the portion of the show where we attempt to wrestle with the vol gods.
We spit directly in their eye and we say we can figure you out.
Sometimes it works.
Sometimes not so much listeners out there.
As we’re coming into the end of the show, all I can say is things are looking frougher.
Things are looking firmer out there.
Maybe a good day to have some levered vol in your back pocket for a rainy day.
S&P off over one and a half, about 1.55% coming into the end of the show.
Dow closing in on about 0.8% right now.
So closing in on 1%, NASDAQ off 2.5%.
And VIX Cash north of a 17 handle right now, just coming into the end of the show, we’re at a 1742.
So VIX Cash actually leapfrogging V stocks right now at a 1721.
Let’s go look at our levels out here.
I was at 15 and a quarter, 1635.
So no joy for us out there.
Mr.
Meatball was doing his palindromic nonsense on VIX 1331.
No joy for him.
And Zed Francis was with us last week.
He was 1548 on VIX and 1688 in V stocks.
So he was the closest on V stocks, not quite within our margin of victory, but looking decent out there.
So that means our guest did the best last week, Mr.
Jim, which gives you the dubious honor of going first.
If you want to do both, have at it.
If you want to just field VIX, that’s all you can handle either way, sir.
Have at it.
The floor is yours.
Oh, what the heck?
I got V stocks on my screen and we want to keep everybody happy.
I am not convinced that today’s little disruption is going to sustain itself for a week.
Maybe it will.
I’m not putting any money on this, but I’m going to say next week, got VIX at 16 and V stocks at 1580. 1580 for V stocks, a little bit of inversion, kind of like we’re seeing out there right now.
Mr.
Rocklop, just same question for you, sir.
What’s popping off in VIX and V stocks on your radar for next week?
Oh, VIX popping off and I’ll do my crystal ball.
I’ll go 1550.
I hate to scum Jim, but I’m going to go a little lower.
I don’t believe it’s going to stay where it is unless of course Congress messes us up, but maybe they’ll or maybe they’ll just be quiet for a week.
So 1550 V stocks.
Oh gosh, I got to pull up my V stocks here.
That would be, yeah, V stocks.
I’m going to say 1575 for V stocks next week and hop on over to optionpit.com.
And let’s say again, it’s a week before Thanksgiving.
Let’s see how much action we can get.
Yeah, that’s true.
We do have a holiday starting to come in the offing as well.
So that could affect the vol.
Right now, listen, as vol is looking frothy, it does seem like lately the animal spirits in the markets have turned.
We are looking a little bit red.
So you know what?
I’m going to be the contrarian here.
I’m going to say the vol premium is going to persist.
I’m going to say we’re pretty close to this level again this time next week.
I’m going to say 1725 for VIX.
And now the question becomes, do we have an inversion in V stocks or do we have V stocks maintaining a bit of a premium out there?
I’m going to say 1655.
So actually VIX Cash kind of doing a little bit of what it’s doing again today.
Obviously, when V stocks closes earlier, we can have a little bit more room to run with VIX by the time we get to it on the show.
So that could usually account for a little bit.
In my case, I’m going to say it’s going to be close to about 0.7 out there for V stocks.
All right, that’s going to do it for us on the show this week.
Of course, Mr.
Jim, if they want to check out what you have cooking over there on the Twitters, where should they go?
What should they do?
At VIXologist on the X slash Twitters is the best place to keep track of what I’m talking about in the volatility landscape.
There you go.
At VIXologist on the old Twitter, look for him to tweet out some more term structure graphs.
Then maybe after that, just buy a VIX strangle listeners because you know, things are going to pop off.
The second he posts one of those.
Jim, a great indicator, a good follow.
Give him a follow over there at VIXologist while you’re checking things out.
You know where to go.
Public dot com slash VV.
It’s literally the easiest landing page we’ve ever promoted here on the network listeners.
So they’re specifically looking for you folks, the vol trading crowd, the VIX, the V stocks, hardcore vol traders of the world.
Public thinks they’re ready for you.
I warned them.
Before you come on vol views, you better be ready for the hardest of the hardcore to come over and kick the tires and light the fires on their platform.
They said they were.
They created a whole landing page just for you.
Public dot com slash VV.
It’s literally the easiest thing you could do to help support the show that’s been coming at you for over a decade now.
Crunching vol for you, talking you off the ledge for over a decade.
The least you can do head on over to public dot com slash VV.
While you’re there, kick the tires and light the fires, maybe get a rebate or two.
Not the worst thing.
And of course, for all you super demanding bleeding edge folks, maybe you want super elaborate ball skew curve, something like that.
Tell you what, you’re coming from us.
So the public folks will probably listen to you.
They really want your feedback on this brand new platform that they have out there.
Begin your journey.
Public dot com slash VV.
It’s a great way to support the show you’ve been listening to for a long time.
And while you’re supporting the show, head on over to your ex dot com slash V stocks.
That’s the place to get access to a lot of this data we’re talking about.
You can also see ways there to sign up for this newsletter.
If not, reach out to us.
We will get you on that list because it is fascinating to see just the list of institutional flow and what’s going up out there for size and V stocks to help give a little more clarity to your analysis of the international ball space.
So hit us up over here.
Just questions at the options inside of dot com.
You can reach out to us over there.
On the old social medias as well.
Add options on most platforms.
We’ll get you signed up for that newsletter.
It’s fascinating stuff.
You want to check it out.
Your ex dot com slash V stocks to go to learn more.
This is going to do it for us on the on demand side for this week.
I want to thank everyone who joined us throughout the week on all of our shows.
Remember it’s all available on demand on our podcast feeds.
If you’re not listening to the whole network again, another reason to subscribe to the full network.
You can check it out at your leisure.
I know we have a great cadre of people who tune into BallViews.
It’s their Saturday.
Listen while they’re hanging out while whatever you’re doing mowing the lawn, whatever you’re doing on Saturday, you tune into BallViews after the fact.
We love you all.
However you get it.
Thanks for listening.
For those of you in the pro, the options insider dot com slash pro.
I will be back in a little bit with our buddy Mr.
Matt from or ads to crunch a whole bunch of unusual activity flow.
If you know Matt, he’s always got some bangers in his back pocket.
Should be a great time.
If you’re not on the pro yet, what the heck you waiting for?
The options insider dot com slash pro.
The place to go to learn more back again on Monday with the option block.
We’ll all see together if this vol pop is short lived or not all the way through to next Friday.
Another episode of volatility views.
Stay safe out there, everybody.
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Options are not suitable for all investors and carry significant risk. Option investors can rapidly lose the value of their investment in a short period of time and incur permanent loss by expiration date. Certain complex options strategies carry additional risk. There are additional costs associated with option strategies that call for multiple purchases and sales of options, such as spreads, straddles, among others, as compared with a single option trade.
Prior to buying or selling an option, investors must read and understand the “Characteristics and Risks of Standardized Options”, also known as the options disclosure document (ODD) which can be found at: www.theocc.com/company-information/documents-and-archives/options-disclosure-document
Supporting documentation for any claims will be furnished upon request.
If you are enrolled in our Options Order Flow Rebate Program, The exact rebate will depend on the specifics of each transaction and will be previewed for you prior to submitting each trade. This rebate will be deducted from your cost to place the trade and will be reflected on your trade confirmation. Order flow rebates are not available for non-options transactions. To learn more, see our Fee Schedule, Order Flow Rebate FAQ, and Order Flow Rebate Program Terms & Conditions.
Options can be risky and are not suitable for all investors. See the Characteristics and Risks of Standardized Options to learn more.
All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Open to the Public Investing, Inc., member FINRA & SIPC. See public.com/#disclosures-main for more information.