On this episode of Volatility Views, we break down the volatility products this week including VIX, VXX, VVIX, UVXY, SVIX, UVIX. We also discuss volatility around presidential elections, what’s going on with the VIX futures curve, and much more.Â
Plus, we predict where VIX will be next week in our popular crystal ball segment.
With your hosts,
- Mark Longo from The Options Insider Media Group
- Mark Sebastian from The Option Pit
- Russell Rhoads from the Kelley School of Business at Indiana University
TRANSCRIPT
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Welcome to Volatility Views, the premier program for volatility traders.
Each week we’ll take a deep dive into the world of volatility with in-depth analysis, trading activity reviews, strategy breakdowns, cutting edge education, and much more.
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If it involves volatility, then you’ll find it on Volatility Views.
And now, it’s time to take a deep dive into the world of volatility.
It’s time for Volatility Views.
Alright everybody, that music means we are back.
One final time here for all you fun folks out there on the podcast side, time for a little bit of vol talk as the kids say yes it is time once again for Volatility Views, the premier program for volatility traders.
My name of course, Mark Longo from theoptionsinsider.com, as well as from the network which is continually growing, futures run down, hope you folks are enjoying it.
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The place to go to learn more as we learn who’s joining us on the old program today.
First let’s go out to the puppyless land of Indiana, where we are joined once again by the once future and now present Mr.
Dr.
Vicks, who is bemoaning his lack of service animals.
Mr.
Dr.
Vicks, welcome back to the show, sir.
As always, very happy to be here.
I was so sad to get an email saying that unless you have a service animal, you can’t bring them in the business school anymore.
Boo.
Boo.
Puppies belong everywhere.
Knowing some of these, knowing some, a lot of these people, they’ll find a way to get their dog certified as a, a stress animal.
I don’t, don’t you think I’m crazy enough that I need a stress animal?
I a hundred percent think that you’re crazy enough that you need a stress animal.
You know, I think I’m poster child for needing a crest stress animal.
Volvus is your service animal.
We are the volatility service animal for the marketplace.
So many people tune into us every week, just for that little bit of relief, that little bit of reassurance we can provide them, walk them back from the ledge for another week.
Dare I say it?
We are the service animal for the vol market.
That should be our tagline.
Volvus the service animal for the volatility market.
And also joining us, that tinny voice means we are joined once again by the greasiest of meatballs.
Mr.
Mark Sebastian from option pit.com.
Nice to meet you.
Why you like that branding the service animal for the vol market.
I think it’s the best branding I’ve ever heard.
You should retire and go be chief marketing for Disney.
Yeah, they could probably use it down there as well.
Forget about the premier program for volatility traders.
We are the service animal for the vol market.
You need a nice little pet.
Need to need to pet us a little bit to feel better.
Hey, we’re here for you as we keep on rolling right on into the volatility.
It’s time to break down the latest developments in the volatility trading world.
It’s time for the volatility review.
I was cracking up all throughout the little break there.
Listen, which is the wrong thing.
I didn’t need that because now my voice starting to go.
I was just feeling better at the start of the show.
I said, maybe this is a show I can do without having to down a ton of lozenges to keep the throat going.
Nope.
That fit of coughing.
That fit of laughing, I should say, set off.
That shouldn’t make myself laugh.
But you know, the notion of us just being the service animals of the vol market.
There’s just a there’s a little bit of a ring to that that just brings a smile to my face.
Hopefully it made you laugh as well.
Listen, that’s what we’re here for at the end of the day as your service animals.
Let’s see the market maybe could use a bit of a service animal today.
You know, it’s kind of been this way all week.
We’ve been kind of net gently drifting north, kicking off some new all time highs, but it hasn’t been without some Sturm and Drong along the way.
We hit them.
Then we have some intraday sell offs.
Maybe we hit them early than sell off.
Maybe we sell off first.
Maybe we rally to them.
It’s been a lot of that kind of intraday whipsaw action today.
No different.
We kind of started off looking green, looking again at or around fresh all time highs again in most of the major indices.
And now as we’re heading into the start of the show, seems like a little bit of weakness setting in the NASDAQ off about a little about a third of a percent.
A NASDAQ kind of bucking the trend kind of bouncing off of its lows now, whereas the S&P kind of bouncing off its high.
So seems like they’re maybe going to converge and meet in the middle.
We’ll see.
So NASDAQ not quite as dire as it was earlier, but still off about a third of a percent.
S&P ticking into the red now off about 0.05 percent.
And the Dow still up, but up less than it was earlier in the session, up about 0.4 percent.
Also seeing VIX Cash starting to slowly climb its way up.
In fact, just now, right as we started the show, it just ticked right around to a 1590, which actually puts it unched.
We were down about half a point in VIX Cash heading into the start of the show.
And now we’re seeing VIX Cash starting to climb that proverbial wall of worry again, right up to about a 1590 out there.
Right as we’re kicking off the show.
So we’ll see if the low was yeah, got to 1520 this morning.
So already starting to climb up a little bit.
So maybe maybe we’re heading into a worry filled weekend.
Maybe it’s going to be a hot weekend for Mr.
Doctor VIX’s UVIX trade.
Have you been slinging the secret, super secret, don’t tell anybody, UVIX trade listeners?
I’m curious.
Hit us up.
Let us know.
And then of course, so VIX Cash now unched on the week, which is kind of interesting.
Haven’t seen that in a little while out there now.
And VIX was at a 92.
I have a feeling if I re-wrack that right now, 93 and a third.
So starting to tick up a little bit there as well.
So it’s down about four points from where it was this time last week.
Starting to claw its way back up as well today.
So interesting.
Pointing towards maybe a red close out there today, but you never know.
These markets, by the time we get to the end, they could be anywhere from here.
So it’s really very much a wait and see type of market.
Let’s go around the horn.
You don’t have to wait any longer for our analysis though.
Listen, let’s get right into it.
Let’s go around the horn the way we started.
Let’s go out to the man who needs a service animal.
He is the once future and present Mr.
Doctor VIX.
What do you make of this little bit of a turn in the markets here today?
Vol is starting to climb back up.
And in general, our post-fed week here in the markets.
Well, I probably over fixate on weekend risk just because I talk to you guys at lunchtime on Fridays.
But you do have to assume that we go through periods where you look around the world and you’re like, what bad could happen in the next 48 hours?
What could escalate in the next 48 hours, etc.
And there are, I would say there are three hot spots that could cause us some issues.
The South China Sea, Russia, Ukraine, and Israel.
And if you know, when you can’t really trade in or out of stuff for a couple of days, you want to square yourself up so that you can enjoy your weekend.
And some of that may involve lowering your stock exposure a bit or maybe buying UVIX late Friday afternoon to sell Monday morning.
But whatever the reason, I do feel like for the three decades or so I’ve been around, there are periods where we’re more concerned about the weekend and periods where we’re less concerned.
Under Lehman Brothers, we were probably bracing every Friday for months.
And I feel like we’ve still got a bit of that going on as we go into weekends.
So when you ask how am I sizing up the volatility and the price action right now, I just think that there’s probably a little bit of escalated weekend risk in the markets.
Too bad we don’t have daily option data going back like 20 years.
I’d love to see what the at-the-money straddles look like on Fridays compared to the rest of the week.
I’ve only got like two years of that.
So that doesn’t do us any good.
Yeah, I’m with you there.
And maybe you’re right.
Maybe it is the bias because we record this show heading into the weekend.
So we’re always looking at the weekends when we do this show.
But I’m with you.
I do.
It does feel, to coin a term, a little weekend-y right now.
It feels like something’s ready to pop off over the weekend again.
You only get that feeling certain times.
I’m starting to get that feeling again out there.
So maybe it is an interesting time to do something as insane as, I don’t know, buy a whole bunch of UVics right around the close.
We would do such a stupid thing.
But you know, crazier things have happened out there.
By the way, speaking of crazy things, you’re trying to get our chat to adopt a dog.
Is that what you’re doing out here?
You’re just foisting dogs upon a chat?
I gotta find a home for that dog.
Is this the dog you stroke during the show?
I’m totally hijacking your whole situation.
Eventually, you’re not even going to have to log on.
Yeah, hey, you know what?
Hey, you want to take over all of yous?
I can go rest my voice.
No.
That would be fine.
You want to be like Joan Rivers?
You want to suck down some cigarettes and go to town?
Have at it, sir.
By all means.
You can have the big cheer.
I’ll go off to do other fun things.
As we keep on rolling, everyone who says that, then they sit in the chair for a day and they’re like, “Oh no, you have it back.”
Nobody wants it for more than a day.
I hosted once and it was, and you know, I speak all the time and I was stressed.
It’s a different beast.
It is a different beast.
Although I had the best guest ever, but still, it was a different beast.
It’s a fun deal.
It’s a fun deal, listeners.
Never knowing someone’s going to stop talking.
Got to keep the content flowing all the time through technical problems and everything else.
It’s a fun challenge.
I recommend everyone try it someday.
As we go on out now to the Southern Volmecca, Mr.
Meatball, same question for you, sir.
Obviously an interesting week.
Kind of a whipsaw-y week, even though net we’ve been up most of the sessions out there.
Seems like the worm is turning a little bit out there today.
What are your thoughts?
What are we seeing this week?
And are you down with to coin a phrase now?
Are we looking at a market?
It’s a little, little weekend-y.
Yeah, you got a little weekend risk.
I think that JP Morgan, you know, we’re, Russell, we talked about this on Option Black yesterday, but you know, we’re buttressing right up against a pretty massive open interest strike for Monday from the JP Morgan, their collar fund.
They’re currently short about 44,000 of the 5750 calls.
And though so dealers are along them and you wonder why 5750 seems to be like a trampoline.
We can’t seem to to bounce through it.
And that’s because when we’re above it, market makers have to sell futures.
And that continues to, I believe, be kind of a weight on the market until that position gets rolled.
I believe they’re likely to roll up to the 6,025 strike.
So once they roll, we’ll have some some leeway.
But I think we’re going to see a little bit of selling pressure until, you know, until until that thing gets rolled.
The magical effect of gamma out there on the markets.
Listen, there’s interesting, interesting stuff out there looking a little bit behind the scenes.
Speaking of looking behind the scenes before we get into some of the products here, a good buddy, Mr.
Overby, who won some goodwill with the masses out there with his immensely profitable long VIX fly a few weeks ago on the show.
He sent this in, asked if we could discuss it on the show.
So I said, sure, why not?
You earn some goodwill with your fly.
He sent an interesting article from I believe this is T.
Rowe Price.
The article is titled, if you want to look for yourself listeners, how do US elections affect stock market performance?
Goes into a lot of different areas, but the area we’re going to key in, obviously, for our purposes is volatility.
And again, they have some interesting visuals.
If you’re a visual learner, this article will suit you well.
And they have a good graph here that I want to zero in on called average S&P volatility around presidential elections and other years.
And they break it down into interesting different periods.
One year before the election, six months, three months prior, one month prior, and then one month immediately after three months, six months, nine months in a year.
Interesting data here.
People coming into this would automatically assume, OK, leading into the election, probably going to see a little bit more froth in the markets, a little bit more churn, especially recently, maybe a little bit of recency bias in there as well.
So you definitely would expect those to be heftier.
And then maybe after the election, you expect all kind of the event has passed.
Usually, again, these days, all bets are off after the election.
But back in the day, once the election was over, it was kind of over.
So you’d expect to evolve, maybe come in after that.
And what we see here with this data across the board is really not that at all.
It’s actually if you had to draw one conclusion, quote unquote, from this data.
And again, there’s issues with this data.
We’ll get to all that in a second.
But if there’s one conclusion you could draw to some looking at this data and a surface perspective is that vol is actually lower across the board coming into and going out of elections.
So during election years, vol seems to be tamped down.
In the one year, one year prior period, they look at other years outside of presidential election years and election years themselves.
That’s the time that they’re closest, about 0.2 percent away.
Six months prior to the election, vol is actually lower during election years.
16.3 percent versus 17.2 percent for other years.
Three months prior, much lower.
That one surprised me.
That one kind of leaves off the page to me.
16.1 percent on average is the vol during presidential election years versus 18.2 percent for all other years.
And then one month prior, same deal, substantially lower.
Actually the exact same amount, 2.1 percent.
17.5 percent for presidential election years and 19.6 percent for other years.
One month after, it kind of flips.
It’s 17.2 percent.
So a little bit more vol one month after the election versus 16.2 percent for the rest of the market.
A full point more there.
Then it flips again.
Three months later, it’s 14.7 percent for presidential election years, 15.8 percent for everything else.
And then it kind of evens out after that pretty much.
So some surprising data.
I encourage you to go check it out for yourselves.
That I definitely looking at it from me, I did not expect, especially in the months immediately leading up to the election for it to be that much of a stark vol discounts in presidential election years.
A couple of data points.
Obviously they have data on this study going all the way back to 1927.
But of course, there’s not an election every year.
There’s only been 24 presidential elections during that period.
So again, the only talking about 24 quote unquote events.
So it’s kind of hard to draw a lot of statistically significant data.
Also because of such a small amount of elections, a few other things have been occurring on the broad macro picture at the same time that were very much economic base that probably had more of an impact than the election itself.
Obviously in the 30s, you had the Great Depression in the 40s.
You had something called World War II, even in 2000, the dot com boom, you know, GFC in 2008, even a little thing called Covid in 2020.
So a lot of these data points might be somewhat skewed.
But still on the surface, looking at this, I was kind of taken aback.
Mr.
Dr.
Vicks, I will start with you as our overbe suggested chart analyst here.
What are your thoughts on this data?
You obviously crunch a lot of historical data.
Does this line up with what you’ve been seeing historically in terms of the impact of presidential elections on volatility?
Gotta assume that this is a known unknown or often a known known that is out into the future and I like to equate macro events like this for the S&P 500 and the NASDAQ 100, etc. as basically as earnings announcements.
And you tend to, you know, things tend to be a little bit calm in an individual stock as we wait for the next news.
But another thing, and I’m on another program with someone that just thinks the government’s line to us all the time and, you know, sometimes we get really smooth economic numbers in the month leading up to the election.
And I recall there was an employment, the October employment number when Obama was running for reelection was a really favorable number.
And if they try to do tame things with the economic numbers leading up to the election in October, then you’re going to have less volatility.
Also we tend to have a pretty good idea as to who’s going to win the election with the exception of the last two.
Before that, I bet you that the one month prior, that 17.5 versus 19.6%, I will bet you that that 19.6% or I’m sorry, the 17.5% would be a bit higher if you go back to the last couple of years.
I don’t say more recent, obviously the October surprise is a more recent phenomenon post rate.
Right.
So now we just big.
You’re articulating it better than I was.
Thank you, Mark.
So that’s why I get to know what I’m trying to say.
But yes, yes, that’s why you’re in the big chair.
The October surprise is now a thing.
The markets expect it, you know, it’s not much of a surprise when you expect it, but say, lovey, that’s, that’s something we bake in whereas obviously back in the 30s, 40s and 50s, not really the case.
Just to meet, I’m curious for you, you look at some historical vol of you now and then as well.
What are your takeaways from this analysis of presidential elections and their impact on Balser?
Yeah, you know, I’m not surprised they’re a little vol dampening.
You know, I’m trying to think of a scenario where, where a presidential election really did cause a wild move.
You know, we had some, some pretty interesting craziness when Trump got elected in 2016. 2016 just leaps to mind overnight.
Yeah.
But by the middle of the day, the next day, things had pretty much calmed down.
I remember I was on air and I said, you know, we’re going to end up up on the day and we did.
Um, so, you know, I, I, I think they are vol dampening.
It pauses really everything, right?
Policies that nothing gets done in Congress policies get stopped.
It’s basically just, uh, it, it makes total sense to me.
Interesting.
Well, check it out.
If you want to see it for yourselves, listeners, how do us elections affect stock market performance?
There’s more data there.
Obviously we just zeroed it on the vol side, but there’s how stock markets perform and everything else.
Uh, check it out.
If you are so inclined out there, listen, oh, by the way, does other interesting nugget, if you’re curious, S and P has posted lower total returns in presidential election years, 11% on average versus a non presidential election years, 11.6%.
So there you go.
Just another little, little factoid for you to pull out of that article as we keep on rolling out there into the vol surface.
And you know, another interesting thing that was kind of catching my eye, even though earlier in the session, Vic’s cash was continuing to erode.
We were starting to see those VIX futures start to firm up.
And that was the case coming into the start of the show.
We had the OCC future pretty much all these features were gaining back almost exactly what they lost this time a week ago.
The no future lost two tenths of a point a week ago.
This week it gained it back.
I’m sure if we reracked this right now, almost halfway through the show, it’d be up even more.
Uh, the OCC future had given up about half a point this time a week ago.
This week is gaining about half a point out there.
So pretty much getting back what we lost this time a week ago, looking out to the rest of the term structure here.
Looks like we top out at right about a 19 and a quarter in the June cycle for this time next year.
So all the way through half halfway into next year, doesn’t seem like an eternity from now listeners, but nonetheless, a 19 and a quarter next summer.
Interesting June, not usually a bastion for volatility, but that’s what we’re seeing.
Mr.
Rose, anything catching your eye on the vol surface this week, sir?
Terribly.
I mean, I know, you know, I was I honestly was going to try to not talk about, you know, no of deuce, but I guess that’s what you got to talk about right now.
It’s kind of funny.
I, October keeps creepy creeping higher relative to November.
So you know, spread was down to 20 cents.
It’s up to about 65, 70 cents or something like that.
Now I just changed my screen, but that’s probably the most significant thing is just the, uh, and then October’s premium relative to spot.
It’s not like we’ve got a four week cycle in here.
This thing expires on October 15th.
So we’ve only got what, two, two and a half weeks or so.
Um, I, you know, I, I think that spread is probably a bit wide.
I don’t really expect VIX to creep up that much between now and the middle of October, uh, because I don’t think people are going to be using the November 15th options to hedge the election.
I think they’re going to be using things that, that expire closer to the election.
And when, when it’s not bleeding through to VIX, then the, uh, the, the low or I’m sorry, the elevated October VIX future is going to look extremely mispriced.
In fact, I think I’m going to go buy some puts right now.
We’re talking, we’re talking yourself into a trade.
I can hear it right now.
Yeah.
No, no, no.
I, you know, I talked last week about completely resetting my account and I did.
So I’m looking for things to do.
You’re off.
You can’t be sitting in cash.
You’re all bored.
I know.
I gotta do something.
Besides give chat suggestions for nicknames for me on here.
Ball King of Chicago.
I heard worse.
I like it.
I’ve heard worse.
They were calling you the king.
They said I was okay, but you’re the king.
And I think, you know, I think the ball king of Chicago Abe Frohman is you.
I’ve heard worse.
I like that.
The chat knows where their bread is.
It’s like 15 years.
But there was a, there was a good guy in the industry who, who recently passed away, a great guy.
And I remember he saw me at an FIA event years ago, right?
When we were first starting this up and he knew he recognized me, but he wasn’t sure what it was.
And he shouted at me across a very crowded.
Have you ever been to FIA Boca listeners?
You know, those big receptions at the pool, hundreds of people, he shouted across the whole thing.
There goes the FX King of Miami.
And he yelled and everyone turned to look to me like, who’s this guy?
It was really funny.
So for a long time, he jokingly referred to me for years after as the FX King of Miami.
We had a good laugh about that for many years.
So there you go.
I can also be the F.
Paul King of Chicago and the FX King of Miami.
Two things are not mutually exclusive out there, but Mr.
Meatball, I digress, sir.
What’s catching your eye in the ball space?
Yeah.
You know, the one thing that throws me off is why are these, these futures already priced in the presidential election?
Why are they continuing to rally?
The October future over the last four days, despite the market going up has gone from the, on the 23rd, it closed 18.
It’s up to 18 80.
The November future has gone from 17 75 to 18 15 December 17 70 to 18 oh five.
I’m not sure where the vol bit is coming for these futures, but it is real and it is palpable.
Yeah.
We are climbing.
Is it the wall of worry?
What are we climbing out there?
Listen, what is causing this to tick up?
Is it, as we said, markets are getting a little weekendy.
There’s some, you could maybe feel the storm kind of brewing out there somewhere, but you don’t know where it’s coming from.
There’s a literal storm right now crashing onto the shores of the Southern US or hopefully all of our listeners out there in the panhandle area of Florida are doing well, hunkering down.
Hope you have enough power to listen to the show.
You know, if you have to listen later down the road, we understand a stay safe out there, but you know what listeners?
Well, we’re not there yet.
I was gonna say no one’s safe from Russell’s weekly rundown, but we’re not quite there yet as we get on into the realm of VIX options.
That would have been an awesome transition though.
Hey, are we looking hot in VIX options land?
The answer is unfortunately no. 320,000 contracts.
I think VIX is hunkering down for the storm today as well.
Not much going on out there.
The ADV is back up of over 900K, 921 to be precise, even though that it continues to be down slightly down 13,000 from this time last week.
That dipped below, I think like 890 something or intro week.
So it’s back up over that even if it is net down on the week.
Let’s do a quick top 10 out here, then we’ll get to the man of the hour, Mr.
Once and Future Dr.
VIX here.
Let’s lighten it up out here in the top 10 in VIX land.
First off, we are back to another rarefied air here in the land of VIX options.
Very infrequently on this show do we see the VIX top 10 make of this indicator what you will.
You know, we started talking about it kind of as a fun lark on the show many years ago, but over the years it has evolved into a somewhat more subtle and dare I say a useful indicator than maybe we all first assumed.
And right now it’s hanging out again at a very somewhat interesting level of exactly 50/50, calls versus puts.
We don’t see that too often really if ever out here in VIX land.
Usually we see VIX getting heavy with puts again when we’re well north of the 20 handle again, right?
Hanging out at a 15/16 level or close to it right now.
That in and of itself is kind of interesting out here.
What does it cost you to break into the top 10 right now in VIX land?
It cost you 200 to 7000 contracts.
That’s respectable.
That gets you to the AUK 19’s.
Number 9 to 13, that’s the AUK 50.
So right back up to the funky upside again.
Number 8, 214,000 of the no doubles.
You know, we were speculating on the show last week.
Are we starting to get into that kind of territory?
The 50’s, the doubles.
Last stuff starting to come back on our radar again.
Maybe that’s playing into this growing sense of unease, concern, call it what you will that we’re all maybe feeling out there.
The futures are firming up.
There’s something crackling, maybe looming in the distance out there.
It’s certainly reflected in some of these strikes like the no doubles, 214,000 of those.
Even though some of those are, you know, one by twos and other types of ratios.
Number 7, here we go.
Now here comes our put Palooza. 246,000 of the AUK 16 puts.
Number 6, 247,000 of the AUK 19 puts.
Number 5, 250,000 of the AUK 20s.
So AUK 19s and AUK 20s.
That’s about as reasonable as you’re getting on the call side here today listeners.
Number 4, you got a whole bunch of puts left.
Number 4, 277,000 of the AUK 17 puts.
If those aren’t far enough out of the money for you, allow me to present number 3, 285,000 of the AUK 15 puts.
It is possible there is some put vertical action going on out there as well.
Of course listeners.
Number 2, 287,000 of the no 35s and the big dog 289,000 of the AUK 18 puts.
Who would own some of the AUK 18 puts?
You have to be a foolish person to have bought some of these for let’s say, I don’t know, a bucko 3 not too long ago.
But I digress as we keep on rolling.
Now is the time for the storm that is inescapable.
Some might say the quiet storm.
It is time for Russell’s Weekly Rundown.
Now Russell’s Weekly Rundown.
Now Russell’s Weekly Rundown.
All right, Mr.
Rhodes, the floor is yours as the service animal of the vol market and indeed the quiet storm himself.
What you got for us?
I did something a little different.
I actually, I stole an idea from you and I went through and I looked at what weeklies have the biggest open interest right now, just out of curiosity.
And I’m going to do a summary.
I’m not going to do a list like you did.
But nine of the top 10 are all October 2nd options right now.
The top one is the October 2nd 20 calls and number two, it’s only 6100 contracts.
The number two one is the only October 9th and it’s 5100 of the October 9th 16 puts.
But in general, it’s a whole lot of calls and only one put.
Much like, or I’m sorry, it’s two puts and eight calls.
All the expirations are next week.
But I figured I can download that data pretty easily.
It’d be kind of interesting to see when we’ve got a Fed meeting or something like that.
Are people looking past the near expiration or not with the weeklies and how are people using them?
Just another way to try to get an idea there.
Then to the trades.
Somebody bought 100 on Monday.
Somebody bought 100 of the October 2nd 15 puts for 10 cents.
Nice trade there.
A thousand bucks that might pay off if VIX keeps on grinding lower as it grinds higher as I’m talking.
But kind of like that trade.
There are two trades on Tuesday that I like and this is going to take a little bit of explanation.
Somebody bought 575 of the September 25th 20 strike puts for 448.
That was the open interest.
So they were getting out of them.
Did some digging.
They had sold them short for 320 on September 17th.
So they took a loss of a buck 28.
If they had held it through settlement, their loss would have been a buck 64.
And then also somebody was buying the September 25th 19 puts on Tuesday for 310.
Exact same situation.
The volume, it definitely was a cover.
They had shorted them at $3.10 a couple of weeks earlier.
They broke even.
If they had held through the settlement loss, they would have had a loss of 54 cents.
I like both of those trades because I think they’re a good reminder that you just don’t want to hold stuff through VIX settlement.
And if you’re somebody that’s sitting out there with a trade that’s kind of breaking even, maybe some of the behavioral stuff gets into your mind and you want to hold out and try to get a profit or hold it through.
Just get out of these freaking trades.
There’s just no other way to put that.
How many times have we sat down on this show?
There’s just no reason to ride that wheel if you don’t have to.
So yeah, and especially in these two situations where they already had losses, they have bought.
Well, one of them was break even, but they weren’t good trades and they would have been worse if they hadn’t gotten out of them the day before.
Just something to keep in mind.
Thirsty.
I kind of like this trade.
Somebody bought, I really like this trade.
Somebody bought 450 of the October 9th, 16 puts for nine cents.
VIX was at 1542 at the time.
I think that is an excellent trade.
And then today, I got no idea on this trade.
If we get a volatility event over the weekend, I want this one investigated.
At 3500 of the October 2nd, 33 calls traded at four cents, which was right in the middle.
It’s not part of a spread, so I don’t have any idea on the direction.
And the open interest, I think, was 50 contracts.
So this is definitely an opening trade as well.
If the trader behind this had a Russian accent, I’m doing more UBIX this weekend than I normally would.
2X.
Yeah.
So, you know, I like those trades even though they were losers.
There’s nothing I really disliked from this past week.
Maybe buying those October 2nd 15 puts because we really haven’t spent much time under 15.
But I do like those two examples of people cutting their losses or taking a break even and moving on to the next trade because that’s one of the biggest weaknesses people have.
That’s why I’m writing a book all about selling when you got to exit a stock.
The sell decision is very difficult.
That it is indeed.
Listen, is it difficult to figure out what’s going on out here in Vix land?
Let’s see.
Let’s try, shall we?
Today, you know, seems like we’re just talking about VIX kind of firming up the futures firming up.
Maybe things starting to climb that proverbial wall of worry going into the weekend here.
Seems like something’s cooking out here in Vix land as well, because not that long ago, right, right into a few minutes into the show, VIX was hanging out around 220, maybe a quarter of a million contracts.
It’s already added 100,000 contracts just in the last 20 odd minutes.
So something’s afoot out there now. 351 is where VIX is hanging out at right now.
So looking here, I say it a little bit more respectable.
The big dog right now, 44,000 of the AUK 17 puts.
We already know from our top 10 breakdown that there’s over a quarter, a million of those open.
So they could be taking some of those off the table. 28,000 for number two of the AUK 15 puts.
Number three, 25,000 of the AUK 20s.
Number four, 22,000 of the AUK 30s and rounding out the top five today, 14,000 of the AUK 16 puts.
Yesterday, surprisingly light, only 345,000 contracts of the tape.
And of that, almost 100,000, 94,000 going up in the AUK 16 puts alone.
So you take that off the table and you’re barely at a quarter of a million contracts out there.
My goodness.
Not a lot going up yesterday. 24,000 is number two of the AUK 17 puts.
Number three, 17, almost 18,000 of the AUK 19s.
Number four, 15,000 of the AUK 18 puts and rounding out the top five yesterday on a surprisingly light day. 14,000 of the AUK 21s.
Wednesday looks like it was one of the banger days of the week.
827,000.
So still nothing this week over the ADV, which is interesting.
The big dog yesterday, 42,000 of the NOV 20s, followed by 33,000 of the NOV 50s.
Probably some vertical action there.
Number three, 30,000 of the NOV 27s. 30,000 exactly of the NOV 27s.
Those were opening, if you’re curious.
Number four, 26,000 of the AUK 18 puts and rounding out the top five on Wednesday.
24K of the NOV 75s.
Now we’re getting to it.
Now we’re getting to the good stuff.
Listen, there’s NOV 75s.
25,000.
The interesting thing is there’s enough OI on that strike.
They could have been closing on those.
There’s at least 25,000 open of the NOV 75s.
That’s the world we’re living in.
The question is, Tuesday, 501,000 contracts on the tape.
Listeners, also a decently, a decently active day.
That gets us to 87,000 for number one of the AUK 16 puts.
Right back to the put, Peluso.
Number two, man, falling off a cliff from one to two again.
Number two is 25,000 of the AUK 19s.
Those 19s have been pretty active this week.
That’s interesting.
Number three, 23,000 of the AUK 17 puts.
Number four, 23,000 of the other side, the AUK 19 puts.
And rounding off the top five on a decently active Tuesday, 16,000 of the AUK 15 puts.
Monday, the banger day of the week, 890,000 contracts coming in off the weekend. 65,000 was the big dog.
It gets us to the NOV 19s.
Interesting.
Number two, 65,000 as well, the NOV 19 puts.
Looks like we have a bit of a funky, synthetic kind of roll going on here because we got the 19s. 53,000 of the AUK 19 calls. 52,000 of the AUK 19 puts.
Looks like we’re rolling from AUK out to NOV listeners.
So take roughly, oh, about 220,000 contracts off the top there.
And that’ll get you some of the rest of the paper.
The big dog outside of that was 52,000 of the D65s.
Those were indeed opening.
So right back to the upside we go.
Mr.
Meatball, sir, kind of a weirdly quiet week on the VIX options front.
Nothing really blowing past even the ADV.
Obviously, today’s not dumb, but it doesn’t seem like we’re on pace for that today.
Anything catching your eye out there in VIX options land this week, sir?
Yeah, you know, I was commenting on this today for how stiff the October future has been.
Look at the open interest on the October downside.
The 17, the 18, 17, 16 and 15 puts.
Between the four of them, you’re sitting on over a million contracts.
That is pretty aggressive.
Today those are two of the two most active contracts are the October 17 puts and the October 15 puts.
You know, the 15 puts for a nickel, not an interesting shot.
I actually, I think the 17 puts for 33 cents, those seem, is it me or do those seem like really, and the 18 puts for 75 cents, is it me or do those seem like really, like, really off those to you, Mark?
They seem pretty cheap.
Yes.
They seem inexpensive.
So that that’s kind of what’s traded today.
I’m looking to see if there was any like big, huge prints that like pop out at me.
Yeah.
Yesterday, more of the October downside, they were buying the 16 puts and the 17 puts again.
Wednesday.
This thing is loading slowly.
Wednesday you did have some November calls going up.
That was, you know, you had some action there.
We had a big sweep of like the November 47 50s, 55, 60s and 65s all go up in one print.
And then shortly thereafter, we had the Jan 60, 65, 70, 75 and 85.
So that looks like some sort of like variant strip or something that they were doing there.
But, you know, something interesting.
And yeah, outside of that, it was just let’s see how how much October puts we can buy that are going to die worthless.
Seem to be the theme for the week, Mark.
Yeah, like the AUK 18 puts at a buck or three.
So I got to love them at like 77 cents.
I got that’s the yeah, they’re really those are inexpensive.
I’m going to be picking up some of those.
I already talked myself into some.
But yeah, I might have to do some averaging down.
We shall see what is averaging down continually is our old pal aspects continuing to give up the ghost.
It was higher coming in to start the show.
Now it’s giving up some more as the show has gone on down to 2710 right now off about a buck 60 from where it was this time a week ago.
As fix for whatever reason just seems to be just a shrinking violet on the options front.
It was averaging, you know, much more that 80 this 80s fallen off a cliff.
It was even 11000 contracts a day last week that already fallen down from I think somewhere close to 20000.
It’s fallen from that again.
It’s down to 8800 contract on another 2200 contract just this week.
So for whatever reason, even though as fix is hanging out of the 27 no one is touching the options, which is kind of weird. 5000 going up today.
So maybe finally the the warm is starting to turn.
Maybe we’ll get north that adb again.
I don’t know why nobody is touching the options out here and aspects of the big dog out here in S fix right now. 1800 of the no, assuming the Jan Jan 36 is these are regular Jan not 2026 or anything like that.
So 1800 of Jan 36 is I know you like those.
Listen to somebody does to the tune of 1800, but not a lot going up in S fix.
That’s kind of the point out here, which is a little bit surprising.
Mr.
Mr.
Rocklops, assuming Mr.
Doctor Vicks will start with you, sir, as Mr.
S fix out here these days.
So catching your eye on S fix land.
Well, I mean, as it’s like you said, it’s kind of stuck.
And I think I I think people are reluctant to have too much short volatility exposure between now and the election, even though I don’t think the election is going to pause quite the volatility that people think it’s going to.
And in fact, with the spread between Auc and the spot so wide aspects would make a lot of sense right now, because even if it goes up a point between now and October 16th, that was the October settlement.
Let’s just say VIX goes up to 17 or so.
Well, the futures are going to drift.
We’re going to drift down and you would make money off of aspects.
So there you go.
I think I’d be I think it would make sense in the current environment.
Surprise, more people aren’t trading it.
Maybe that’s why people aren’t selling calls against theirs.
It could be the other side of the whole logic there as well.
Yeah.
As fix is kind of just dried up on the options front, which is kind of weird.
Mr.
Meatball, same question for you.
You’re now running an S fix product.
What do you make of what’s going on out there in aspects?
Lancer, I mean, you look at the futures curve and you know why aspects isn’t doing very much and you know, it doesn’t it doesn’t really invite a lot of option trading around it.
So you know, I’m not totally shocked that that it’s just kind of floundering here and that the option trading has kind of fallen off.
I think as we head into the election, you’re going to start seeing some some interest in this increase pretty dramatically because historically, even during covid, we’ve seen pretty dramatic drops in volatility out of the volatility index post election.
And I expect to see that again.
Let’s see if we see anything fun out there and its sibling product of UVIX, which is catching a little bit of a lift going into the second half of the session here.
It’s at about a four seventy right now.
It puts it up nearly a half a point, about four tenths of a point from where it was this time last week.
UVIX volume continues to erode as well.
Thirty two thousand a day.
That’s down three thousand this time a week ago.
Seems like they’re probably going to hit it today, though.
Twenty three thousand contracts on the tape today, including the big dog out there today.
Forty one hundred of the four half calls expiring today.
So those are looking pretty good, probably.
They’re probably buying those that passed as prologs.
We shall see.
But in which case, hey, value who to use, make sure you take them off.
And in terms of size positions out there, looks like the big dog.
Once you get past the non split adjusted nonsense, looks like it’s the six calls expiring today, nearly ten thousand of those.
Those seem like that’s a bit of a bridge too far.
But hey, you never know.
UVIX can get crazy by the end of the session.
Mr.
Mr.
Dr.
Vicks, as you’re planning your weekend trade, anything catching your eye on you, Vicks, sir?
I’m going to do what I normally do.
I know you asked me that and I never say anything exciting.
I’m thinking about buying it earlier, like shortly after we’re done talking.
Then later, you know, well, it’s up twenty two cents right now.
So you got to check.
You can buy it right now as we’re talking.
You like to buy it early.
Yeah, no, I’ll probably I’ll likely buy it.
I have a funny feeling it might catch a bit into the close.
So I’d just rather I say that and it’ll be on fifteen cents.
But in my mind, and then I’ve got some other things to do and I’m afraid I’ll forget to trade it.
And then, you know, the world to go to hell.
Yeah, you’re far more willing to take the delta risk on you, Vicks, than I am.
Yeah.
Yeah.
Someone who’s been caught holding the bag just in the last few minutes with you, Vicks, as it erodes to nothing.
Yeah, I like to have it right on the close.
But, hey, to each their own out there, if you are going to play with it, if you do play with that trade, listen, I’m curious.
Hit us up.
Let us know.
Mr.
Meeple, anything catching your eye on you, Vicks, Lancer?
You know, looking at it, not a lot happening there.
The option volume is, you know, a little decent today.
A few thousand contracts.
I’m looking at those, at those, the, I’m surprised there’s a bid for the five calls.
There’s a penny bid for them.
For next week, you do have a little bit of action.
Those five dollar calls are going for twenty three cents.
Got seventeen hundred of them going up.
And so they’re going out and even buying the six calls.
I don’t know if I love the six calls, but, you know, that’s not a bad, the five six calls spread for tens a dime.
Not a terrible little little call spread if you don’t feel like buying the stock.
Little fun flyer to the upside in you Vicks listener.
Let’s get out to what I know a lot of you love, at least the the volume says so UVXY twenty four and ninety as we’re getting into the last bit of the show here up a little over a point about one point one point somewhere it was this time last week.
Their ADV has come down a little bit to astound about eighty thousand.
It’s still obviously much more than just about everything else we talked about combined.
So down about a thousand to eighty thousand a day now.
Looks like they’re going to hit it today.
Sixty one thousand contracts on the tape in UVX right now.
And what is what is the big dog position wise out there in UVX?
Again, you got to get past all this non-split of justice.
Let’s go out to the the DS 40s four oh sixty three hundred of those bad boys are open right now.
That one’s certainly an interesting choice.
And in terms of action today, what’s the big dog today?
Twenty four half puts going up here in UVXY fifty three hundred times.
So I said we’re at about a twenty four and nine.
It’s like paper might have sold those.
Those were opening.
So drawing a little bit of an aggressive line in the sand towards the end of the day and we’ll wind it down here with the meatballs.
New favorite VXX forty nine and a half up about two and a quarter points and where it was this time last week.
The ADB and this one continuing to road a little bit as well.
Thirty two thousand a day down a thousand from where it was a week ago.
Eighteen thousand contracts on the tape today.
So they might get there.
We’ll see.
They got a little bit of a ways to go in terms of size positions out there and VXX.
The big dog are seven thousand and sixty of the sixty six calls.
Wow.
Expiring next week on the fourth.
Wow.
Good luck to you.
I don’t know if we’re hitting sixty six by next week.
But then again if we get a crazy weekend event we could be bad.
We got a sixty handle not too long ago in VXX.
We could get back there again with some crazy market action.
Mr.
Meatball I think catching your eye in either UVXY or your new beloved VXX.
You know they’re they’re rallying.
You know surprising bid in both the UVXY and or UVXY and VXX.
Option volume starting to pick up in VXX as well and I’m seeing those markets start to tighten up.
So I kind of like the I kind of it’s interesting to watch but yeah I’m not I’m I’m interested in that UVXY obviously continues to to kind of hang around here.
It seems like it’s been between twenty three and twenty five for weeks but that option volume also nice and high and we’re seeing those spreads tighten up as well.
So nice increase in interest in implied volatility products.
Mr.
Rhodes anything catching your eye in either UVXY or VXX to round out the show.
Not really just how like we said they’re catching a little bit of a bed later in the day.
You know the the curve is going to the flat curve I guess is going to have somewhat of an impact on on those guys.
And actually provide them a little bit of a tailwind so you know makes sense to maybe look at them for if you think we’re going to get some sort of surprise.
And there’s always surprises in store for us listeners when we head on into the crystal ball.
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 listeners welcome to the crystal ball and coming into the end of the show we are seeing everything kind of hanging out close to where it was at the start of the show.
S&P kind of flirting with unched now.
Nasdaq off about a quarter of a percent Dow up about half a percent and VIX cash clawing its way towards 16 at about a 1594 as we’re kicking off the crystal ball here.
And do we have any 15 handles.
Yeah we had one and it was me last week listeners at my 1576.
Unfortunately not feeling it out here this was close.
I get I get the reward for the closest but point one eight away is not going to do it.
It’s not within our point one oh margin of victory so close but no cigar for me.
Andrew was on the show last week he was out of 1499 so no joy for him.
And Mr.
Rhodes was at a seasonally appropriate 1666 no joy for him.
So I was close as I guess I will go first again this week.
Why not.
Let’s kick off the fun part out here in a valve use land for this week.
You know we are joking about how the markets are feeling weekend.
So are we going to get a little bit of a weekend jolt.
If that’s the case does the valve bid persist.
If past his prologue the answer is no.
So by this time next week even if we do get a shot in the arm over the weekend from a ball perspective is it going to last until Friday.
I’m going to say you know what maybe we are a little bit juicier this time next week.
I’m going to say 16 double 16 55 is where we’re hanging out just because it seems like there’s there’s a little bit of something brewing out there in the ether.
Mr.
Mr.
Actually yeah Mr.
Dr.
Bix you were close next closest you get to go next or what are you feeling this time next week.
I want to go out on a limb 1499.
I haven’t seen a 14 in a while.
Taking Andrew’s pick from last week to going out.
Oh was it his pick last week.
I did not realize that.
I did not realize that.
So you’re going 14.
All right so you got quite the range about one and a half.
I know we’re we’re we’re opening it up for all kinds of Mark Sebastian potential choices.
All kinds of pallets.
Oh yeah.
Nonsense you got to go 16 61 you’re going to go 14 41 50 which way you going sir.
I think I’m going to go right in the middle.
I’m going to do 1551.
There you go.
You must love having come up with this because it just makes your life so much easier.
It because this this whole thing is nonsense.
None of us knows it’s just a guess.
We know so you don’t know why not.
What’s what’s wrong with you.
You don’t know.
We all know.
Don’t listen.
Pay no attention to the man behind the curtain.
Listen we all know here at the end of the day.
So that’s your ball market for next week.
Really wide 1551 before the meatball 1499 for Mr.
Dr.
Bix and I am at the correct 16 double out there.
That’s going to do it for us on the show this week.
If you’re on the pro side you already got options out of these.
It was delivered to you earlier listeners because I do have to head out immediately after the show today.
So enjoy that.
You’ve been on the pro yet.
What are you doing.
The options insider dot com slash pro the place to go to learn more.
And if you go around the horn let’s learn what everyone else has cooking that may interest you.
Mr.
Meatball where should folks go.
They want to learn more ball goodness.
Yeah well you can always head option dot com.
We put stuff good stuff there but follow me at option pit at option pit and you get all my Twitter goodness and all my posts.
So follow along with follow along me at option pit.
That is Twitter goodness option pits the place to go to learn more.
And Mr.
Rhodes I think you want to go to Twitter as well.
Where should they go sir.
I’m just Russell Rhodes at Twitter.
Next Friday morning I’m doing a webcast for interactive brokers on the Euro stocks 50 daily options.
They’ve only been around for a year now.
So we’re doing a little year review.
Their performance is so different than SPX it’s ridiculous.
And I’ll just leave it with that.
But that’s what’s going on with me right now.
Look at you picking up the old Dr.
Beastox moniker.
You know who knows maybe we’ll have an opportunity to discuss that again sometime in the near future.
Hint hint.
I believe so.
So that should be fun.
In the meantime listeners check them out at Russell Rhodes.
Two S’s two L’s R H O A D S all one word.
If you find the drunken weatherman you went too far.
Go back one to find Russell instead.
That is going to do it for us on the network today.
Hope you had a good trading week.
If you missed anything it’s all there waiting for you.
Another reason why you should be subscribed to the full network listeners.
Now get out there get away from your trading screens.
Have a good break.
Hope you enjoyed us being your service animals with the volume market for this week.
Take a little bit of a respite.
Get away from the screens.
Pay attention this weekend.
It is starting to feel a little weekend out there to coin a phrase.
So be have your head on a swivel a little bit.
Then we’ll see you back here on Monday for the option block all the way through to next Friday another episode of volatility views.
Stay safe out there everybody.
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