The TWTR lock up ended not with a bang, but a plunge through the ice. ?Yesterday, TWTR closed on the lows and a new low since the IPO.? The action felt like a big lock up, seller wanted to get out as the selling was steady all day long. ?I am not sure that they are done yet.
TWTR seemed to drive down most of the social networking stocks and the wave hit banks and other names.? With a near 1% drop in the SPX, the VIX was only up .51 points, which is a little light.? The big reason is that implied volatility has been over priced for a little while.
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Stocks have not been able to break out and they are not cracking up either.? If one side of the market like momentum stocks crater, there has been other names to take their place.? That is the market we have right now. ?That generates less movement overall and crushes the realized volatility.
LIvevolX (r)?www.livevol.com
The slack move in the vol. futures means the market is happy with the current ?overprice? in ATM volatility.? There is enough volatility risk premium for now.
The Trade
Iron Condors a little closer to the money and shorter in duration seem to be working well.? If the VIX futures start to expand for real, close the short term IC?s down. ?Today the VIX future premium came in a bit, so they should be more lively if VIX actually moves again.
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