The Fed is staying the course and winding down their bond buying program.? We have some higher short term rates but lower long term rates on the horizon as growth is better but still slow.? That is exactly what the Fed wants.? Slow and steady wins the race and for now stock like the news.? Maybe we can catch a bit more rally if we can put the Middle East genie back in the bottle.? For now VIX is taking a thumping as the good economic
As good as the news is there are still some small stocks that benefit from the economic halo.? Take a look at PLUG.? This is a poster child for green energy and the name had a huge run yesterday climbing from near $4 Tuesday to $5 yesterday.? The OP blog has highlighted the name before and usually on a big move when there is smoke there is fire prior to an announcement.
Livevol (R)?www.livevol.com
This time the IV is still real cheap as the trip down into deadsville killed the realized volatility and what had once been a fun stock is now a dead stock.? Buying premium in this name usually works when the IV is below 125% so we might get a crack at this again.? Use the Aug cycle since in this name smoke usually means fire.
The trade
Buy delta neutral straddles in the Aug cycle in PLUG.? Hold.
Disclosure: positions in PLUG
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