Between the budgetary haggling and the Greek financing issues, the market has plenty to keep itself on hold.? The VIX did take a pretty good plunge down to around 16.94 to close near the lows of the day.? Under any other circumstances, if the IEA said the USA was going to be oil independent in the next 20 years, a nice little rally might ensue.? The tepid response means no relief rally until there is some, well, relief.? Same brew of better economic news but simmering macro issues.? At least from the VIX point of view, those macro issues took a sharp haircut in our sentiment.
One stock not treated well lately is Facebook (FB).? The name rallied today about .90 on not a lot of news.? What was very un-VIX like was the IV in FB rallied in the near term months.? The lockup comes off this week on the 14th, and the market is bidding up the near term (big green buildings are higher IV strikes).? The fact that the Nov looks darker green is that the IV is up more in that term.? Lots of bets are buying up the options on some potential action after the lockup.? Even while Nov gets bid up, I am not so sure the moves will materialize.
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?3d charts from Aqumin/ ORATS?????? http://www.optionvisionpro.com/
The last FB lockup was kind of a non-event afterward.? The stock traded a little lower but, ultimately, moved right back up.? I am guessing that more of the same might occur.? There is a nice time spread between Nov volatility and December volatility, and that would give Dec strangle a nice head start.? I like buying FB volatility in the mid 40?s, and I think selling some Nov would help finance that.
The Trade
I think buying the FB Nov/Dec strangle swap makes sense with at least 1 strike away from the ATM.? I have had buying premium in FB on my list for a while and this might be my cheapest entry point.