On this episode Mark is joined by:
- Mark Sebastian, Option Pit
- Russell Rhoads, Kelley School of Business
They discuss:
- The latest in the volatility markets in the US
- The international volatility market (VSTOXX)
- Interesting trading activity and developments in VSTOXX, VIX, SVIX, UVIX, UVXY and VXX
- Virtual Focus Day – Trading European Volatility Markets: Daily Options & VSTOXX 2024 – https://volatility.focusday.eurex.com/
- Their Crystal Ball predictions for VIX
- and much more…
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.
We’ll also bring you exclusive conversations with the traders, researchers, and asset managers who are reshaping the volatility landscape.
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.
It is noon central.
It is 1pm eastern.
You know what’s going on in the wild world of volatility?
Let’s find out together, shall we?
It is time, once again, for Volatility Views, your premier program.
For volatility traders, my name of course, Mark Longo from the TheOptionsInsider.com, as well as from the network upon which so many of you folks are binging and continues to grow 17 and a half years in, 17 and three quarters now.
Still growing, the future’s run down, getting new listeners all the time, which we love to see new people discovering not just the world of options, but indeed the network as a result.
So if you’re not listening to the full network, and I know there’s a dedicated Volatility Views audience out there, and we love you.
You get the show however you want.
You do you at the end of the day, but if you’re not listening to the full network, then you’re missing out on a whole bunch of other awesome stuff, including the newest edition, the future’s run down.
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It’s available everywhere.
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And then of course, if you want to come back after Volatility Views, you want some unusual activity goodness in your life.
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The options insider.com/pro.
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Get your name in the hat for October.
The options insider.com/pro.
The place to go to learn more as we learn who’s joining us on the old Volatility Views program this week.
First to the Southern Volatility Mecha we go where we are joined once again by the greasiest of meatballs, Mr.
Mark Sebastian from optionpit.com.
Mr.
Meatball, welcome back to Volview, sir.
Hey, Mark.
Good to be here.
Good to be here today.
Lots to talk about and I’m excited to do so.
Glad you are excited.
We are excited as well as we also expand our volatility net to catch one Dr.
Vic’s moonlighting as Dr.
Well, more than moonlighting these days.
We’ll get to that in a second as Dr.
V stocks as well.
Mr.
Russell Rhodes, when he’s not doing that, he’s holding court over there at the Kelly School of Business.
Mr.
Rhodes, welcome back to the program to you as well, sir.
Well, and I’m always thrilled to be here.
I got to let you know where your ears burning yesterday as I had a bunch of young minds in my office.
I was talking about you.
I what they were.
I could feel someone cursing me out as they spoke.
No, it wasn’t that we’re CME does a college trading contest in October every year.
It kicks off when the market opens Sunday night and I told them that the futures and the opt-in Twifo are must-listens for the team.
Awesome.
So yeah, that’s a, it’s like, well, how do we decide what to trade?
I don’t care.
It’s more about learning how trading works at this point, but you got to listen to this guy and showed him who, showed him, you know, who, who I was talking about and everything.
And then after that, you guys asked me to be on Twifo next week.
Woo.
Getting the kids to that, learning them to the dark side with the gateway drug that is futures.
I see some interest.
Absolutely.
All the kids blew this crypto stuff.
One kid quit the team because he couldn’t trade crypto.
Oh, you want to trade the dodgy corn.
That’s not good.
That’s true.
He’s like, I’m doge or I’m out is what he’s saying.
Oh yeah.
I go, I want to trade dope because we were separating everything up.
He goes, well, I want doge coin.
I said, are you kidding with me?
All right.
And I didn’t say that out loud before they get onto me in the chat.
I was not, I did not drop that F bomb.
He comes in and he wrecks everybody in the trading, in the trading guy as we keep on rolling and we go out to the volatility review.
It’s time to break down the latest developments in the volatility trading world.
It’s time for the volatility review.
All right, everybody.
Welcome to the volatility review, the portion of the show where we break down what the heck is going on from a vol trading and trending analysis, unusual activity, all sorts of fun perspectives.
And as we’re kicking off the show, it seems like we are back in firmly in the green, vol coming back to its senses, maybe a little bit out here, maybe not.
Maybe you want vol to be a little bit juicier out there, but we did bounce off the 5,700 level.
Looks like close to a couple of times out there today.
We’ve been doing a lot of whips on this weekend today.
No exception.
But as we’re kicking off the show, S and P off, I should say up about half a percent.
Nasdaq up about eight tenths of a percent.
Dow up about four tenths of a percent.
And VIX hanging out right around the 19 handle as we kicked off the show.
It puts it up still from last week, up a little over three, about three point one points on the week.
So vol still frothy, a lot of that driven by our jobs number this morning.
If you listen to our advisors option show earlier this week, I was talking with Mr.
Matt from Orets and he was saying, you know, they’re crunching the numbers for the election.
And as they were doing that, they were surprised to see just how much juice was being baked into this week’s and today’s jobs number.
It was really kind of beyond what you typically see.
So there was a lot of attention on this number and they came in today.
I think spoiler alert, white hot is the number.
The labor market is on fire.
Two hundred fifty four thousand jobs versus expectations for one hundred and forty thousand.
So the labor market, white hot.
So yeah, definitely.
We definitely need some stimulus to stimulate this.
Let’s go another half point fed.
Got to got to cut the rates to keep this labor market from imploding.
But my goodness.
Wow.
Over a quarter of a million jobs.
Crazy town.
Now you might be saying, well, now are we in this range where is good news bad news?
Because now the Fed is not going to cut a half point again or whatever the case may be.
Apparently not.
Apparently we’re in the good news is good.
All is right with the world parts of the market.
At least we are for right now.
If you don’t like it, just wait five minutes because we all know what these markets are prone to out there these days.
But yeah, just a completely white hot.
And I don’t think anybody has anything that hot today.
Again, proving why they call it the dismal science at the end of the day.
Listen as economists can’t estimate to save their lives.
V VIX is still looking for all the as we’re kicking off the show.
One twelve up nineteen points in this time last week.
I’m sure if I reracked that now, given that we’re a little bit lower, about one ten.
So still pretty frothy from where it was this time a week ago.
Let’s go around the horn the way we started.
Let’s go out to the southern volatility Mecca.
Mr.
Meatball, I think if you could, you know, encapsulate this week in one term, it would be a whipsaw e to make up a term.
What’s catching your eye out there this week, sir?
Yeah, you know, every day has been been a lot of whipsaw, a lot of movement.
You know, what’s been crazy is the absolute destruction of actual movement on a realized basis from where we’ve been coinciding with the VIX itself going straight up.
I was looking at SPX and looking at standard Garch model modeling the last 10 days realized volatility is down to six point four two percent and over the last 20 it’s down to eleven point seven percent.
And yet here we sit with a nineteen percent VIX shows you where sometimes realized vol and implied vol don’t always mash up.
And the reason being, obviously, we you know, I think the baseline VIX with the presidential election is somewhere between, I don’t know, six and would love your input on this Russell and Mark as well.
I think it’s 16 ish with just the election.
But this this Middle East potential war and will they or won’t they blow up the oil fields is holding vol at 19.
Now it’s probably a really good short.
But if it’s not a really good short, VIX is going to be 35 and it’s going to be a really, really, really, really, really bad short.
And that’s kind of what we’re seeing.
It’s been interesting that this has been a really soft week for Apple, you know, in Apple terms and a really strong week for the energy complex.
We’ve seen oil and oil vol go straight up.
And then the other area where vol has gone up with a lot of movement has been in Asia, where we’re looking at the FXI index at a one year at a one year high by a wide margin, a two year high by a decent margin.
And you basically have to go back to January of 2022 to get back where we were in terms of the current pricing in FXI.
So there is volatility out there.
It just is not in the S&P.
And that’s kind of what’s kind of caught my eye in terms of all markets.
All right.
Let’s keep going out to the land where he is corrupting young minds with talk of futures.
Mr.
Road, sir, what it was catching your eye in the vol market in this apparently white hot labor market these days.
I don’t know if anybody’s ever done this, but I would love to see like the last 10 days realized vol versus where VIX is right now.
Put VIX as the numerator and in the last couple weeks is the denominator.
And I’ll bet you that ratio would be pretty high relative to what we’re used to seeing.
But I think that would be typical of a wait and see type of market.
And we’ve kind of been in a wait and see mode ever since we got the upper MC or ever since we got the rate cut through really probably this employment number.
This is kind of the this is our first nice look back at what happened in September.
I also think that there was that I know from looking at the weekly trades that most people expected a volatility crush today, which which they’re probably pretty upset about because I’ve got put buyers that that that bought the puts that expire next week.
And like they are not looking good on these trades, which is just unfortunate.
And I think it’s the they’re being held up here and they’re being held up by every every night.
And the overnight stuff is prime time for us.
You’re seeing live feed of people blowing each other up.
And so far it hasn’t spread.
But if it if it does start to spread to really taking people out and I personally I think because apparently I hate to be in the politics, but just for a second, I think Biden said that he had told Israel not to touch their to touch Iran’s nuclear program.
Well, I don’t remember him saying anything about don’t touch their oil.
So I like that point that Mark Sebastian just made about, you know, are they going to blow up the oil fields?
We’ve seen we saw one crazy guy back in the 90s blow up all of his own oil fields.
A lot of a lot of you children out there probably don’t remember this.
But when we had the first Iraq war, Saddam Hussein blew up all of his oil wells.
And for better or worse, it was one of the most apocalyptic looking things you’ve ever seen in your life.
Wouldn’t be surprised if we do something along those lines as well, or at least try to impede Iran’s ability to make money.
Talk about cutting off your nose to spite your face if Israel did that.
I mean, my goodness, that would be an unpopular move, I think, to put it mildly out there.
Yeah, interesting stuff out there.
By the way, I didn’t mention the top of the show.
We also have the resolution of this port strike.
People were thinking this might spill over weeks, maybe even months and really hit the economy.
It’s resolved after just a few days.
So that’s obviously playing into a little bit of the green we’re seeing out there on the screen again today.
No one wanted another repeat of the early days of the pandemic and container ships were backed up for miles.
Nobody wanted that noise.
So at least that’s one good sign out there.
But yeah, still, Val not coming off perhaps as aggressively as you might have hoped.
And certainly a lot of those put buyers Russell is going to break down in a bit, probably not as much as they were hoping as well.
Let’s get out to the land of the VIX futures.
Let’s see what’s cooking out there in the VA surface this week, shall we listeners and kicking off the show.
Spoiler alert, we are a little bit higher than we were this time a week ago.
The future as we kicked off the show is up about exactly two points from where it was this time a week ago, right around 20 and a half.
And the no future is up almost exactly one and a half points about one point four, five points hanging out at about a 1945 out there.
So intriguing stuff across the board, our entire term structure looking pretty firm.
Intriguingly enough, if you go all the way out to June of next year, the only 20 handles actually in the future.
So yeah, intriguing stuff out here across the board on the ball surface.
Let’s go out to the Southern Volatility Mecca.
Mr.
Meatball, sir, what is catching your eye on the ball surface this week?
Yeah, well, we’re in the futures continue to be in backwardation.
The VIX was well above most of the future sands October as at the close yesterday.
But as you know, with this precipitous dive is now trading below the entire curve.
But the you know, the curve has that kind of big dipper form shape.
But the VIX is trading underneath it, which is kind of interesting.
I think if we do get a little bit of if we don’t get anything over the weekend, we could see vol continue to relax.
Because, you know, I continue to think that that October future is just way overpriced by, you know, they’re they’re holding it up.
They are holding it up.
Indeed.
And listeners, if you’re not hanging out in the pro, then you’re missing out on nuggets like Russell telling all of our chatters that he’s he wants to know what to do with all the toilet paper that he’s holding out there.
So these are the nuggets.
These are the pearls you’re missing.
If you’re not hanging out in our chat during the show.
Mr.
Rhodes, what are you going to do with all the toilet paper you’ve been hoarding a and and be what’s catching your eye on the ball surface this week?
I don’t know.
I made my 18 year old stand in line at Costco for an hour and a half with a with a big old palette of it.
It’s great having teenagers on the ball surface.
What Mark just pointed out with respect to us being in backward nation, that’s not quite the case for my buddy V stocks.
And I will talk more about V stocks in a little while.
They the October November relationship for both VIX and V stocks, there’s about a point between them.
But a spot V stocks is at 20 and a quarter.
And we know that our beloved VIX is around 19 or so.
So a part of me is just wondering, just wondering if you know, the October, both the October V stocks and VIX contracts are about at the same level.
I know when you get a volatility event, you you tend to get more juice, as you like to say, I’ve been stealing that word a lot lately.
You get a lot more bang for your buck with V stocks rallying.
So a part of me thinks if you’re worried about weekend volatility, of course, the best trade ever is just keep buying you VIX on Friday and selling it on Monday morning.
But if you like the futures markets, I would take a look at maybe buying the October V stocks for the weekend and selling the VIX, the October VIX future for the weekend.
If something happens, great.
If nothing happens, you know, they’re probably not going to experience too much of a loss on having a long and a short exposure to broad based October/November volatility expectations.
All right.
And since you invoked V stocks, let’s get there now, listeners, for the return of the International Volatility Review.
It’s time to explore what’s happening in the volatility market beyond our shores.
It’s time for the International Volatility Review.
The International Volatility Segment is brought to you by Urexx, home of Euro stocks, V stocks, DAX and the German government bond based Eurobund, Eurobabel, EuroShots derivatives.
Urexx is the leading European derivatives exchange.
Learn more about trading V stocks, futures and options.
The European volatility benchmark at www.urex.com/vstocks.
I missed that music, but now it is back.
Listeners, time to peer beyond our shores.
See what’s popping off on the International Volatility Front.
Remember, you can follow along with this yourselves.
Go to urx.com, urex.com.
Or just want to dive deep, just get a nice screenshot of V stocks itself.
Just go to stocks.com, s-t-o-x-x.com.
That’ll get you there as well.
And as Russell alluded to earlier, we are seeing V stocks looking frothy, even if it is coming in.
It came off another point today, closed at 20 and a quarter.
But you could clearly see back when we were talking about V stocks over the summer, there was a pretty wide chasm.
It was five points at some point between V stocks and VIX.
Of course, we had those kind of surprise European elections playing out over there as well.
So there was a lot going on in Europe that wasn’t really playing out here.
Hence that wide berth.
These days not so much.
We’re seeing them a little over a point between each other right now.
In fact, they were less than a point when we kicked off the show, obviously.
VIX still trading so that’s coming off a little bit more now.
If you want some frame of reference, the low, 12-12 back in December of last year, a 52-week low of course.
Even though we did threaten that level a few times earlier this year back in March, I don’t think we ever got down to exactly that low, but we got somewhere in the mid-12 range.
So we’ve hit the 12 level a few times, 52-week high.
Go out on a limb.
See if you can hazard a guess.
I’ll give you a couple of seconds.
When was the 52-week high for V stocks?
I think you could probably guess.
Yes, it was August 5th, 31.16.
So V stocks, as we’ve shown before, as during the parliamentary election surprises as on August 5th, it can surprise to the upside when it’s feeling its mojo.
Mr.
Rhodes, I know you’ve been crunching a lot of V stocks out there these days.
What’s catching your eye in the land of international vol these days, sir?
Sure.
You mentioned that V stocks is closed.
I just want to mention it trades up until, or it’s quoted up until 1130 Chicago time, 1230 Eastern time, all that kind of stuff.
So it has been closed for about an hour or so.
VIX was at about a 75-cent discount when they went out.
So not too much of a change since that one was closed.
It’s just very difficult doing apples-to-apples comparison because of the time difference between the two.
I have a method where I use 10 a.m.
Chicago time as the joint closed for the two of them.
I love tripping people up.
One of my mentors at SIBO loved asking people questions that he knew nobody was going to get the right answer to.
What do you think the open, what V stocks option do you think has the most open interest right now?
And they have standard expiration.
So there’s October, November, and December.
Yeah, there’s none of the weeklies out there.
I’m going to say– They don’t have the weeklies.
But yeah.
I’m going to say November, and I’m going to say 25s.
Okay.
Subtract 10.
The 15s.
And go out another month.
These 15 puts?
You nailed it.
Dang.
Almost 70,000.
Wow.
Number two is October 14 and a half puts.
I thought for sure, given what we have– I know, I just– Popping off over the next month.
I thought for sure some of that would play out in some upside.
But wow, none.
Yeah.
Yeah.
It’s pretty interesting.
Just the distribution is mostly– most of the downside strikes, very little in the call and all puts, and vice versa.
But I just– I found it very interesting that December– I just– I’ve never seen the biggest open interest in the volatility space in the decades that I’ve been following it now, where the biggest open interest is not in the front month, let alone in the third month.
But somebody’s probably betting on a volatility crush into the end of the year.
They’re probably just thinking that at some point between right now and middle of December, that maybe we’re going to finally resolve the election in the US and all that other kind of crap.
So it’s not a terrible idea trade-wise.
Is there just so much uncertainty with respect to what’s going to happen with the futures, what’s going to happen with that market?
Do you have a better chance to get into those, et cetera?
I know we normally say for moves, you do want to be trading the option that is right in front of your face expiration-wise in the vol space.
But I’m pretty sure that this is a bet on the US selection working itself out OK.
That’s the only reason that all the volatility of 2024 starts to dissipate as we get into the happy holiday season.
So that’s the biggest thing.
Trade-wise, there are always a bunch of big trades.
Somebody did a two by one ratio put spread.
And this is a– well, you know what?
This may be where our trade is.
Now I’m correcting myself on air who– that big open interest in the D15 puts is part of a ratio spread.
They’ve combined them with the 17 puts.
Oh, OK.
Yeah, that makes a little bit more sense.
I like it a little better.
A little better.
Yeah.
And I don’t know the price that they put it on.
I should be looking at my big trades in conjunction with the big open interest to get a read on that.
But I am going to investigate that further.
I can see that that trade traded 27,000 times this past week.
I’m going to investigate that trade a little bit further and put it up on my blog this weekend because it deserves some more investigations instead of me guessing what’s going on there right now live in front of people.
Looking for a fall not just to fall by the end of the year, but explode downward if that’s part of a ratio.
Well, thank you.
Yeah.
I’m going to do some digging while you guys are talking.
You know what?
V stocks low in last December was 12 12.
They’re betting on a 12 12 repeat this year, I think.
What do you think?
1212.
And I know somebody else that would like to see a 1212.
Sounds like a lot of people wouldn’t mind seeing a wouldn’t mind see.
I think Mark.
Mark Sebastian just likes those fun numbers.
I do.
Yes.
Although I like 1221 better than 1212.
I know you do.
I know you do.
Mr.
Meeple, I know you’re not huge on international vol, but what are your thoughts on size D15 puts maybe as a 17 15 ratio put spread and V stocks there.
I mean, it makes a lot of sense as you know, there’s a lot of things that need to be worked out, but you know, at Russell’s point around the U S presidential election and volatility would make a total sense to me in terms of you know, reasons that someone would be playing for some, some calming there.
And with, you know, I don’t, is there like a V VIX for V stocks, Russell?
No, they, they do not have, oh, um, yes, there is.
I’m sorry.
I thought you were asking about ETPs.
Uh, yeah, they’ve got, um, they have a V V V stocks, V V stocks.
So I’m guessing with V V V stocks, I’m going to guess V V stocks is pretty bid and with V V stocks, pretty bid, you’re going to want to have something like a ratio to protect you from a potential volatility crush.
Like what you know, like, uh, because you can be long puts, but if you know, V V stocks drops from, you know, let me see where it is.
It’s at one Oh six.
Yeah.
If it drops from one Oh six to 80, those puts are not going to do you a lot of good.
And, um, I think that’s the, the potential concern in, in, um, not ha and, and, and why you want to use a ratio spread, uh, for that, that play.
Oh, they put this trade on at a credit, uh, 43 cents.
They sold like the, yeah, they basically sold the 17s and bought the 15s.
Yeah.
I like that as a, as a spread.
I think it makes a lot of sense.
And, uh, and the open interest on that is, is, it’s even higher than what I just saw on the chart.
So there we go.
We see people sell puts outright all the time.
They don’t get 43 cent credit, let alone doing a ratio and collecting 43 cents.
Interesting.
Interesting.
A color me intrigued.
Mr.
Rhodes, speaking of intrigued before we get out of here, we have to touch on this virtual focus day, AKA, I was going to bring it up at the end.
Russell Rhodes day.
I got to get to it now because it’s you’re, you’re doing your best impersonation of me, sir.
You are on literally every single session of this day.
You’re the intro, you’re the first panel, you’re the second panel.
So I’m just going to call it Russell Rose day.
Well, what is this?
Uh, so what we’re going to do in, in, this will be the second year that I’ve gotten to do this with the great people at your ex.
I really, really, and I think, I think you enjoy working with them as well.
Um, I’m, I’m, I’m waiting for like, you know, a cupcake or something as a thank you, uh, play it for, for, for nudging them to get more involved in the US market again, because I think there’s some opportunity for them here.
Uh, but the focus day, uh, we did this last year in late October and it’s actually a precursor to the your ex, uh, their global conference in late February, uh, in Frankfurt that I personally think you should come broadcast live from.
Um, but we’re going to, we’re going to spend an hour talking about the Euro stocks, 50 index options, especially the, the zero DTE topic.
Uh, they, they have been probably the, the most consistent performing, uh, straddles in the little universe of index mark index option markets that have dailies.
And the universe that I use for that is DAX Euro stocks, 50 Russell, 2000, NASDAQ, 100, and the SMP um, but the daily Euro stocks, 50 options have, uh, they’ve been really great for option sellers.
Uh, and you haven’t gotten run over too badly.
Uh, that can’t say the same thing for the SPX and then DX over the last couple of months.
And then we’re going to spend time on V stocks and, and I bet you we address this big trade that I’m talking about right now as well, uh, where, uh, where how people are going about using V stocks.
I have a systematic approach to put on a radio spread that does well when we blow up to the upside.
It did fairly well, uh, back in early August for us as well.
So I, and we’ve got, uh, I think we’ve got a couple of people from large investment banks.
I don’t know if they’ve announced everybody that’s going to be there yet, uh, that are going to talk about from an institutional standpoint, how they people see people using V stocks and how they see people using the Euro stocks 50.
So listeners, if a whole episode of Russell is not enough for you, how about a whole day of Russell that head on over to your ex.com.
Look for it.
It’s called trading European volatility markets, daily options and V stocks is on October 24th.
Sign up now.
It’s again, it’s all the doctor V stocks you can handle.
And then Stum, as we keep on rolling out there into the land of the mothership VIX options, is it a banger day for VIX options?
The answer is I think it kind of spent itself yesterday.
We’ll get to that in a second today, about exactly a quarter of a million to 51 to be precise on the tape.
So not exactly lighten the world on fire.
The same could be said for the 80 V 887,000 contracts on the tape right now.
That’s down 34,000 from this time a week ago.
So we had a few tilts at the ADV windmill this week, but not a ton.
Let’s get out to the top 10 size positions.
Once again, for all of you who cling to our top 10 VIX as an indicator, we are still at the 50 50 mark, which is not a level we hit that often.
And usually when we hit it, we don’t stay here for too long, but now it’s two weeks in a row, 50 50 calls versus puts listeners.
I cost you 223,000 contracts to break into the top 10 this week.
That gets you back to the no of doubles right back to the fun upside listeners at number 10, number nine, 234,000 of the OCC 17 puts.
So pick your poison upside or downside listeners.
Number eight, 240,000 of the OCC 25.
Number seven, 241,000 of the dear, I say it reasonable OCC 20s, especially compared to the no of doubles.
Number six, 268,000 of the OCC 19 puts.
Number five, 283,000 of the OCC 15.
It’s 15.
I don’t know.
It might be a bit of a bridge too far, but we shall see.
I wouldn’t mind those 15s come to play.
Number four, 288,000 of the no 35.
So 55, a little bit too far out there for your taste.
I present to you number four, 288,000 no of 35 listeners.
Number three, 289,000 of the OCC 18 puts.
Who would buy those?
A madman only number three.
I see me number two, 311,000 of the OCC 45s.
Man, now we’re getting back at it.
And the number one, the big dog out there this week, listeners in our 50 50 evenly split week, 317,000 of the OCC 16 puts.
Any of those strikes, any of those options strike your fancy listeners?
Hit us up.
Let us know.
And before we get into the rest listeners, it is time to unleash the beast.
That is Dr.
Vicks.
Once again, time for a little of Russell’s weekly rundown.
Now Russell’s weekly rundown.
Now Russell’s weekly rundown.
All right, Mr.
Rhodes, I believe you teased us with some put buyers, sir.
What you got for us this week?
It did.
Not surprisingly.
And I did not trade the employment number.
I would have probably done one of these bad trades.
So just let me know.
So starting out early Wednesday, I like this trade somewhat.
I hope it’s, I hope it’s combined with something else.
Somebody came in early Wednesday with, with Vicks between kind of like in the 19 a half to 20 and a quarter range.
It was all over the place.
They sold 1600 of the October 9th 28 calls.
And they did those at prices to 50 between 50 cents and 61 cents.
They could cover it right now at 35 cents.
The open interest is 1800.
They traded 1600 of them.
It’s going to be easy to keep an eye on this one through next Wednesday settlement.
Later on Wednesday, this is where the put buyers all come in.
Kind of funny.
You said who in the world would be buying those 18 puts?
Cause my, my, my salvage tray or my, my final trade that I don’t really like that much involves doing that or actually involves telling them only a mad man would buy those.
So that’s all I’m going to say.
Okay.
So later on Wednesday with Vicks at 20 36, we had a buyer of 200 of the October 20, October 9th 22 puts.
They paid a dollar 67 for those puts.
And those puts are a dollar 67 bid right now.
Way to go.
And Vicks is a buck 36 lower or a buck 18 lower.
As I look up there, just keep that in mind for the moment.
Vicks is at 20 57 on yesterday.
Somebody came in and bought 500 of the October 9th 19 puts and they paid 22 cents for those.
They are 23 cent bid right now.
Get out of that trade salvage.
I’m kidding.
I wouldn’t, I would actually, I’d leave it on.
And then finally the, and actually the trade that I liked this week is that, that buying the one that is somewhat in the money.
Cause when the trade was put on, there was only three cents of time value.
So relative to the spot index, but the behavior of Vicks is hurting that trade.
And then today this is an exit trade, but I’m not real wild about it.
Somebody sold 3,100 of the October 9th 18 puts for 10 cents.
This is most definitely a salvage trade.
I, it looks like they paid 48 cents for those last week at some point last week.
Honestly, I’d leave it on.
I’d think about Monday to exit it.
That’s I just at this point, and it’s real easy for me to say that because they did the trade earlier this morning when Vicks was in the twenties, but you know, they often talk about if you’ve got a position on, let’s say you sold some options and it’s a nickel offer right now.
And we used to use it, the options in suit, we’d say, well, you know, would you, would you be willing to buy that option in a nickel right now?
Or, and if you weren’t willing to buy that option outright or you weren’t, wouldn’t be willing to sell that option, excuse me, a nickel, then you would say, all right, we’ll just go ahead and get out and take the nickel.
In this case, yeah, I just feel like you might have a better exit opportunity on Monday.
And I thought that when I wrote it up a couple hours ago, so I’m not real wild about giving up on this trade at the point of where you’re just taking 10 cents in.
I’m sure somebody’s somewhat angry.
Man, I have caught myself from not using, from using bad language today, like multiple times.
Somebody’s very angry about this trade not working out.
So they just threw in the towel out of anger, nothing like the anger and revenge trades for profitability.
I find that’s a good path to fame and fortune, sir.
The anger and revenge.
Yeah.
Yeah.
As covering up losses and going to jail, that’s the only way that you’re going to get famous trading like that.
All right.
Let’s keep rolling.
Let’s see what’s trading out here in Vicks proper, shall we listeners?
Like we said today, not exactly lighten the world on fire.
It’s up to 260 right now.
The big dog right now, 28,000 of the OCC 30s, followed by number two, 21,000 of the OCC 28 and 16,000 of the OCC 26 is number four, 14,000 of the OCC 20s.
It’s an OCC call, Palooza number five, about 11,000 of the OCC 22s.
But all in all, heck of a lot of nothing on the tape today.
Listeners, yesterday though, yesterday was the banger of the week.
Well, close to it.
The Tuesday did manage to surpass it, but a banger day nonetheless, 1.27 million contracts on the tape yesterday.
So lighten the world on fire yesterday.
The big dog, 183,000 of the OCC 27s, followed by 168,000 of the OCC 29s.
You’ll know if you listened to the option block yesterday, we broke down that vertical.
That was a size vertical, went up at least 150, 160,000 times yesterday.
Listeners, it was the OCC 2729.
Paper bought it about 157,000 times to start for 12 cents.
And we thought this kind of a weird one.
You don’t see verticals and VIX usually that tight.
If you do mechanically, they’re difficult to take off if you get a nice surge in VIX.
And you know, good luck selling that for your two bucks.
So it was a weird one.
Didn’t hate the level, but it was just kind of a weird one.
I couldn’t really make my mind up about it.
I didn’t really love it though.
So I thought we’d put it out to you folks as the ultimate arbiter is the end of the day. 12 cents, OCC 2729, are you buying or are you selling?
And you folks wanted to sell it.
58.3% said you don’t want to touch that thing.
Only 41.7% said you want to buy it.
So yeah, it’s kind of a weird one.
Clearly it doesn’t resonate with you folks either.
But either way, that was number one out there yesterday by a country mile.
Number three out there yesterday was the OCC 35s, 105,000 of those.
Number four, 102,000 of the OCC 45s looks like some, maybe some vertical or maybe some roll action because it probably was closing on the 45s and then 50,000 on the D 17 puts.
And then out to Wednesday, another light day, hence our ADV coming in 482 on the tape, the big dog, 67,000 of the OCC 18 puts again, only a madman would own such things.
I say as I am sitting on a bunch of them myself.
Number two, 29,000 of the OCC 17 puts.
Those were closing.
Number three, 27,000 of the OCC 28s.
Number four, 23,000 of the OCC 19 puts and rounding out the top five, 19 K of the OCC 20s.
Tuesday was indeed the banger day of the week, 1.33 million just managing to edge out yesterday.
The big dog, 121,000 of the OCC 17 puts.
So that’s the strike of the week out there.
Number two, 120,000 of the Feb of 42 halves.
Those were opening.
So somebody’s coming to play in the Feb, 90,000 for number three of the DS 42 half.
So are they rolling from DS to Feb already?
If so, it looks like a house money roll because they’re doing 30,000 more on the second leg.
You don’t usually see that unless you’re sitting on some house money listeners.
Number four, 64,000 of the OCC 20s, the number five, 43,000 of the Nove 17 puts.
Monday, another meager start to the week, 398,000 contracts on the tape.
The big dog, 28 K of the OCC 17 puts followed by number two, 26,000 of the OCC 30s.
Number three, 25,000 of the OCC 18 puts.
Again, only Mad Men rush in there.
Listen, number four, 23,000 of the OCC 40s and number five on a light Monday, 22,000 of the OCC 22s.
Mr.
Meatball, we were kind of vacillating all over the place on the vol front this week.
We’re whipsawing, we’re moving up, we’re moving down.
We got some weird prints out there.
Anything catching your eye out there and VIX options this week, sir?
Obviously, Thursday was a really busy day.
On top of that huge call spread, big buyer of the December 17 puts with the December, with TIDA futures, which I thought was kind of interesting.
You had some really active trading on the November 55 calls.
Those got a bunch of action and that was kind of the most interesting trades from Thursday.
Friday, today has been real slow.
Biggest trade of the day is only 5,000 contracts, seller of the November 17 puts.
Don’t know if I love that trade.
You’ve got some OCC call buyers that are likely playing the weekend.
I’m just pulling up.
Yeah, that was really it.
Wednesday, nothing really special, a little bit of October playing.
That’s about it there.
Then Tuesday, no huge prints, but you did have some more October call spread buying.
The 20, 30 call spread in the 21, 28.
Then Monday, yeah, it was again, Monday was another busy day in October buying the 20, 30 call spread, buying the 22, 40 call spread on the cheap.
Lots of near-dated hedging flying around here in the volatility index over the last week.
That’s a weird paper, including that vertical.
Mr.
Rhodes, do you love that vertical?
27, 29 in October for 12 cents.
Then we’ll get out to your favorites out there, the twins, S Vicks and Yuvix, X Vicks out of 25 listeners.
When we kicked off the show, puts it down a little over to about 2.1 points.
Obviously, S Vicks dipped a little lower this week.
Let’s see how low did we get this week?
We got down to a little bit north of 24, looks like about 24, 30.
That was yesterday.
So obviously a tough week for S Vicks, at least to the upside, but getting some of that back now.
Also, it’s been a tough, every day’s been a tough day for a while on the volume front. 5,500 contracts on the tape today.
That compares to an ADV of only 6,500.
Let’s down another 2,300 this week.
So S Vicks options volume has just fallen off a cliff over the last three weeks to a month.
I mean, it was threatening 20K not too long ago.
Now it’s down another 2,300.
Skipping up 2,000 contracts a week.
Pretty much at this point, it’ll be back to 50 contracts a day.
It’s just nobody wants to trade S Vicks options right now, which is interesting because the underlying is moving a bit, but no joy out there.
Yuvix right now, by the way, the size position in S Vicks right now, the Jan 36 is 1,800 of those bad boys.
So interesting.
Yuvix five and a half up about eight tenths of a point.
Doing a little bit better on the volume front today. 30,000 contracts on the tape today.
The ADV is 31,000.
That’s actually up 1,000 on the week.
So Yuvix managing to hold on to some of its ill-gotten gains.
Well, S Vicks continues to take it on the chin.
Let’s see right now.
What’s lighting it up out there today in S Vicks?
It’s the five half puts expiring today.
People people love this trade.
Nearly 8,000 people love going straight to the fire on expiration day in Yuvix.
They just love rolling them bones.
Followed by number two, 2,000 of the five half calls expiring today.
If past is prologue, the put people will probably be happier.
But you never know these days.
And then 1,700 of the five half puts expiring next week.
Yeah, they just love that.
Straight to the fire trade in Yuvix.
In terms of top positions, it’s the, uh, Oc fives expiring monthly 12,000 of those bad boys out there right now.
Mr.
Rhodes, three things for you.
Oc 2729 for 12 cents.
You love it or mechanically does it not really make much sense.
And then S Vicks and Yuvix was catching your eyes, sir.
I like the, uh, I like the October trade.
Um, you know, I, I like things like that.
There are a little bit up in the twenties that, you know, you, that, that you don’t have to worry about from day to day.
And I think that, that, that one’s probably gonna, gonna do what it’s supposed to do if, if they get the proper move.
Um, with respect to you, I know I’m trying to get quickly into, I did some work on Yuvix and I know we’re coming up against the time.
So I’ll just skip to that very quickly.
Uh, every week I want to come back here and tell you guys that I tried something with Yuvix.
And so last week, you know, I, I always sit here and run my mouth and I said, well, I’ve been buying the Yuvix kind of when we, when we finished this program and then I sell it on the open on Monday, uh, because, uh, it looks like it’s been climbing higher into the weekends.
Well, I went back and I looked at, uh, one, 1 p.m. central as my entry time, as opposed to the close.
And you know what I found?
Not a gosh darn thing.
In fact, you, in fact, if you, if you entered the trade consistently at 1 p.m. central instead of on the close, uh, your, your average profit is 0.04%.
Remember your average profit is like 0.2% or something like that if you use the closing price.
But I, I want, I’m experimenting around because I, I feel like there, there’s gotta be a way to improve on this.
It’s fine the way it is, you know, and it’s fine, especially if you’re got short volatility positions on and you’d like something, you don’t want to start your week off with a whole buttload of pain when, uh, if we get a volatility event over the weekend.
So it makes a lot of sense on a behavioral and a quantitative standpoint.
I just really do feel like there’s gotta be a way I can improve on this.
And I’ve done that.
I’ve looked at selling calls against it on Monday morning, and then it went down more than the call premium.
I just, I, I’m still playing around with it because I think there’s, we can do better with this.
On SVIX, I’ve got a full position right now.
I’ve been chipping back into it, but for a quarter of the position, I’m sure the October 18th, the standard, uh, 25 calls and I sold those, uh, for a buck 20.
Um, I, um, it’s a dollar 30 bid now.
So, uh, guess I’m, I’m, I’m okay with that, but I did sell some calls against my SVIX, uh, maybe buy them back on Monday morning, maybe sell an SVIX calls and buying them back on Monday morning.
If, uh, if we get a volatility event that puts you VEX higher, maybe that’s a different way to go about, uh, playing a weekend volatility spike.
There’s just so much.
I was on a program earlier and it’s just, there’s so much you can do in so many ideas.
We’ve got a lifetime of ideas, uh, with what we can do with all of these markets and VIX by itself, you probably have a lifetime of ideas of how you could go about trading it.
An embarrassment of riches.
So as we go out to the Southern volatility Mecca, where he has been busy diving deep into the SVIX market these days as well with his latest product over there at the land of the pit.
Mr.
Meatball, sir, what’s catching your eye in the twins of SVIX and you VIX, sir.
Yeah.
I mean this choppy market and the, uh, the VIX in kind of perpetual backwardation as we head toward, uh, with Israel has really put a damper on, uh, SVIX and, and put a little bit of a wind behind you VIX.
I keep waiting for them to announce a reverse split because you VIX would be so much fun if it was $55 instead of $5 and 50 cents.
Uh, maybe Russell wouldn’t like that as much, but, um, you know, it there, the, there is some decent you VIX option volume that’s trading today, uh, which are that’s been trading this week.
Um, today, you know, you, you’ve got, uh, some real active stuff expiring today.
There, uh, the five 50 puts, the five and a half puts have been flying off the shelves.
And, um, but outside of that, uh, you know, you VIX seems to really heat up the day of expiration.
Uh, the other trades that we’re seeing is stuff for next week, uh, little bit of, uh, calls and puts trading on kind of both sides.
So they’re, they’re kind of trading on trading it both ways right now.
Um, pretty, pretty interesting, but nothing really in particular.
And yeah, SVIX, um, you know, the, the stock just kind of seems to be waffling about and with the structure of, of VIX and in it being in kind of this backwardation, it is going to kind of have a tough time, uh, going up.
Uh, and that is what you’re seeing out of, out of SVIX.
Interesting.
They’re really coming for the implied volatility of the options today, despite the lack of really any volume here.
Yeah.
People can’t get enough of those, uh, those act of money puts and you VIX that’s the trade du jour out there trading a whopping eight cents right now, listeners.
So if you want to get in while the getting’s good, there you go.
Eight cents.
Maybe you want to sell them for six.
If you’re a really crazy person, uh, let’s round out the last couple of, uh, of victims here.
Then we’ll get to the crystal ball for this week.
UVXY 28, even as we kicked off the show and still hanging out there right now up a little over three, about 3.1 points and where it was this time a week ago, doing decent volume, 47,000 contracts on the tape of UVXY, not immune to the ADV erosion that’s going on out there as well. 79,000 a day now that’s down to thousand this week.
And it’s down quite a bit from close to a hundred K it was not too long ago.
In terms of size positions, you look in that pre split adjusted stuff.
The only thing that’s out there really are the, uh, or I should say post split adjusted, uh, 6,500 of the nove thirties is really the big boy, which kind of close to the money right now.
And then VXX 53 80 up a little over four, about 4.3 points on the week, 23,000 contracts on the tape today against an ADV of 30 K that’s also coming in this week down about 2000 and the big dog out there, 5,400 of the 66 calls expiring today.
Well, good luck with those.
I hate to laugh, but we’ve all been there listeners.
All right.
They’re probably buying those that passed his prologue and I don’t know, 12 points in a couple hours.
We’ve seen crazier things I suppose, but, uh, that’s probably not good for society.
If we’re popping 12 points in VXX before the end of the day.
But I digress Mr.
Rhodes, anything catching your eye on the lands of the VXX or UVXY, sir?
No, I mean, you guys know, I almost feel like you should just skip me on that question because their mark is I don’t pay a whole lot of attention.
I try to be inclusive.
I know we have a bunch of UVXY fans out there who are like, why don’t you talk the whole show about UVXY?
It’s so amazing.
So, uh, I try to at least tip my cap to them at the end of the show.
Mr.
Meatball, anything to add on UVXY or your new favorite?
I know you’ve been playing in a little VXX, sir.
Yeah.
UVXY is down about 80 cents today.
VXX down, uh, you know, marginally as well.
Uh, call it a buck.
Uh, they, they both have had a nice little run kind of, you know, when S VX is rallying, these are falling.
These are rallying and, uh, they’re getting pretty peaky though.
Pretty.
So pretty peaky.
I like that.
That’s a good word for it.
By the way, I did just to add to the fun.
I did dive in on some of those, uh, UVX, well, excuse me, UVX, uh, five half puts.
So we’ll see how they play out.
We’ll, we’ll play those off on options, oddities, and a little bit lists.
I’ve got to have some of the fun here on the show as well.
Speaking of fun, it’s that time listeners, it is time for 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, everybody.
Welcome to the crystal ball.
You know, we kicked off the show.
VIX was at about a 19 even.
And as we’re coming to the end of the show, we’re seeing things getting a little bit fraudier out there.
We’re a little bit north of 19 half.
We’re at about a 1965, which actually puts us away from everyone.
Looking here, we didn’t have a single 19 handle on the board this week.
Listen, as it was myself, it was the meatball and it was Mr.
Rhodes last week.
Mr.
Meatball, excuse me, Mr.
Rhodes is at a 14.99.
So he was playing the low card.
Mr.
Meatball in the middle, palindromically appropriate at 1551.
I was playing the high card at 16 double, but no joy for any of us.
I guess I was the closest.
I was still over three points away.
So no joy for any of us this week.
So we’ll go in order of lowest to highest.
How about that?
So Mr.
Rhodes, you got to go first.
What are you feeling for this time next week, sir?
For this time next week.
So what do we get next week?
We’ve got a couple of things I’m really looking forward to next week.
We’ve got the FOMC meeting minutes from the September 18th meeting.
I can’t wait to hear what they said.
We’ve got CPI and PPI and I’m still on board with, I don’t think inflation is completely gone and at some point we’re going to get surprised by it.
So I’m going to say 2024 with the thought that we’re going to see some, we’re going to see some inflationary numbers next week.
We’re going to see a little bit of juice, Mr.
Meatball.
Where are you going on the palindrome scale, sir?
Well, you know, to Russell’s point with the really strong jobs number, I think the CPI number becomes a lot more important now because if it comes in, if it comes in a little bit hot markets are going to be really unhappy.
For right now, good news appears to be good news, but we start getting some, some, you know, inflation is no longer dropping.
You could see some action.
My personal belief though, is the VIX is so overbought that it does need to pull back.
What was Russell’s guess this year?
2024.
Yes.
2024.
All right.
I’m going to go with, you know, as I said, the election base case is about 16.
So I’m going to go 1661.
I’m giving you tons of tons of room.
You just started typing 1661 and I already wrote my answer before either of you went.
I wrote down a American appropriate 1765.
So that’s your market for this week.
Listen, Mr.
Rhodes going to the upside, Mr.
Meatball going to the palindromic dark side and myself hanging out at a pro America, not quite 1776, but a 1765.
All right.
That music means we have come to the end of another volatility sojourn for this week.
If you’re hanging out in the pro, just relax.
I’ll be back in a little bit with the rock lobster to break down the week that was from an unusual activity perspective.
We’ll see how those U VIX puts workout.
All sorts of fun going on out there on options oddities.
If you want to join us, only one place to go.
The options insider.com slash pro is the place to go to learn more.
And Mr.
Rhodes once more, if they want to learn more about what we’re calling around the show here, a Russell Rhodes day, where should they go?
What should they do?
Well, you guys tweeted it and I retweeted it.
So there’s a link out there on the Twitter right now.
I think if you Google your ex focus day, you’ll have no problem whatsoever seeing what we’re going to talk about.
And in fact, I think if you do that, you can see what we did last year as well.
I’m sure that nothing ever disappears.
That’s, you know, you can never get those pictures off the internet.
So I, I have a funny feeling you could actually see what we said last year about the V stocks and the single day options that are the daily index options as well.
And like I said, I’m going to do a bunch of digging on that one by two that I saw in V stocks going out to December.
They, they’ve been, I think they’ve been scalping around it.
I’m going down a rabbit hole on this one.
So on my sub stack tomorrow that you go out tomorrow morning, I’ll have a full guesstimate slash analysis of what I think that trade is all about.
You have opened up a can of worms for yourself.
I have.
In the meantime, listeners, if a day of nonstop Russell sounds as intriguing to you as it does to me, then check it out.
Trading European volatility markets, daily options and V stocks.
You can find it over there.
Your ex.com, E U R E X.com’s coming up on October 24th.
I can already see in our chat.
A lot of folks are intrigued.
They want to check it out.
So mark your calendars for October 24th, be there or be square as the cool kids say listeners and then going out to the Southern volatility Mecca.
Mr.
Meatball, sir, folks want to talk as VIX or anything else.
VAW, where should they go?
What should they do?
Yeah.
Come to option pit.com and read all of our free content we put out and follow me on Twitter at option pit.
And you know, we got a nice YouTube channel.
I’m starting to put out stock analysis just about every day.
Come and check it out.
Nothing’s ever going to beat the Andrew pulling a rocker pulling the stump montage you had there that one.
No, that is a great.
That’s that’s worth the price of admission right there.
Listen, what is your, I know your option pit on Twitter.
What’s your YouTube handle again?
At option pit option pit on YouTube as well.
Uh, uh, yeah, option pit.
There you go.
Option pit on all the platforms.
Listeners, check out Andrew pulling up stumps.
It’s gold with a fun jaunty tune over there.
That’s going to do it for us on the on demand side.
Thank you for joining us this week.
Listeners again, we’ll be back in a little bit with the pro folks for options oddities.
Then we’re off for the weekend.
It’s been another crazy tumultuous week.
We mean it when we say it every week.
Listeners stay safe out there and we’ll see you back here next week.
Another episode of volatility views.
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