🚗A Tale of Two VIX Days

[] [( [( [( MARK-et Open Hey OP Crew, It’s Andrew Giovinazzi’s alter-ego Vol Man up top today! Below we have a VIX tale of two days. The purple curve and the blue curve. Both are in contango, but one is before the Fed opined on rates and the other was after. [ Normally the Fed speaks, VIX drops and everything appears OK since we know what the next month will look like. Such is an equity market dominated by too much government intervention. It’s been a problem since 2009 – and still growing, sadly. Not so this week when traders wanted the Fed to slow down hikes and they did not get it. As a matter of fact, things got worse as the tone-deaf statements made by Sec Treasury Janet Yellen stirred the hornet nest. The blue curve was the VIX on Friday’s close. Three days after the Fed spoke, traders entered the week a little more nervous than prior to the Fed FOMC minutes release. Note below the size of the daily VIX candle prior to Silicon Valley Bank (Ticker: SIVB) blowing up. Things were pretty calm and then boom! I see the VIX ranges this week were nothing to sneeze at. Higher ranges in VIX mean the market is illiquid and looking for a direction. As of Friday we don't have one. [ 30-day VIX chart with one-month candles This gives us our market quandary. Is the Fed going to keep raising until they bankrupt every bank after they made them buy bonds that paid no interest – or not? That is a fair question. Griff says no they already started QE by opening up a collateral swap for cash, effectively injecting a fortune into the banks. The Fed is not saying QE, but they are doing it. [ 12 month VVIX There is no vol story but this story. Week 3 of this story and no change. VVIX is off the highs but still around 100, which is significant going into the weekend. Lately, no good news comes out of the weekend. Until there is more clarity on this issue, expect more of the same we got this week. The contango in a higher VIX just means the market – SPX – will orbit and chop in big ranges next week. Those are ideal for strangle traders in the big indexes. Also a topic I will hit Monday morning for OP Mentoring. [And join AG and Mark live on Tuesday at the open the Trading Desk room for a special sneak peek.]( Let’s Go! [/campaigns/org775804783/sitesapi/files/images/774695510/ag (2).png] Power Income: Debt Crisis Unleashed This Week We are beginning to witness wild swings in government bonds on a scale we have not seen in decades. The Fed has lost control of the bond market. This is having a dramatic impact on banks and all bond markets that are critical to an orderly functioning of the global financial system. [This month, the CME futures exchange had to briefly halt trading in some US interest rate futures.]( Then on March 17 there was an interruption in trading of short-dated German bond futures. [Today, we’ll dive into the impact the historic increase in bond volatility is having on all markets and how to position for it.](- Griff Profits In Pumps: The Bullish Engulfing Candle Grab a match … It’s time for a candle lesson. The bullish engulfing Japanese candle is found at the bottom of a downtrend. It signals a possible change in that trend, a rally or a bounce. This candle has a green real body, meaning the close was higher than the opening for the day. That green real body completely engulfs the previous day’s candle. It shows that the bulls have taken over, the bears have covered and it’s the end of the downtrend. This is what it looks like on a chart: [ [Now, let’s apply it to a trade idea.]( - Licia OPTION PIT GLOSSARY [( There are plenty of terms in the trading world that need defining. The [Option Pit Glossary]( is here to help. Today's phrase is: Iron Condor: This is similar to an iron butterfly, but the short strikes are out of the money, generally around the 5-25 delta range. For instance, the trader could sell the April 35 put and April 55 call, and buy the April 30 put and April 60 call. [( DISCLAIMER: FOR EDUCATIONAL AND INFORMATION PURPOSES ONLY; NOT INVESTMENT ADVICE. The materials presented from Option Pit LLC are for your informational and educational purposes only. Neither Option Pit LLC nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational and educational purposes intended is at the user’s own risk. DISCLAIMER: OPTION PIT LLC IS NOT AN INVESTMENT ADVISOR OR REGISTERED BROKER. 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