The VIX settled below 14 again yesterday, selling off as the market rallied. ?This after it underperformed Wednesday on the sell-off that briefly sent the market lower than 1550. ?One can see that while the S&P sold off Wednesday and had a small rally yesterday, the VIX has basically spun its wheels.
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While the VIX has failed to move, another asset has taken off. ?The 10 year note, the original risk asset, has sky rocketed higher as economic figures missed this week. ? I do not think we can attribute this to QE alone, I think this is smart money moving into bonds and out of cash and/or foreign markets.
You can see above how the ten year has taken off higher, while the VIX has flat-lined over the last few weeks. ?It is odd, and something has to give. ?Either the VIX traders are right, OR the bond traders are right. ?It cannot be both. ?I think it is probably the VIX that is right, and NOT treasury bonds.
The Trade:
Bond IV was SO low earlier this week, if you were smart enough to put on a strangle or straddle you are a happy camper, kill the trade. ?I now think that Bonds might be a bit over done, and I might start to get short here. ?IV is still low in TLT, or the 10 year ETF, ?I would use options.
If you want to learn what all this means- ?This is the type of information we will train you to analyze in our?gold course. ?If you needed help following this trade, you should be in that course. ?Call us at 888 Trade 01 and ask for Taylor or Joel.