🚗VIX and Window Dressing Don’t Mix

[] [The daily rundown of everything happening at Option Pit.]( [( MARK-et Open Hey OP Crew, Vol Man here with my weekly analysis. We saw 2023 highs in SPX this week. I was banging the drum that the end of quarter window dressing would be something and the sexy stocks sure delivered. Apple Inc (Ticker: AAPL) turned in a $3 trillion market cap by Friday’s close. This is starting to look like a bull market, highs and pullbacks but finding ways to make new highs. AI tech got us here and the rest of the market can take it from here. [ SPX daily price action over the last 30 days Note that most of the IV moves above were flat until the end of this week. Jul SPX IV into the weekend fell apart. The circled area early in the month showed vol staying firm and the circled areas toward the end of week got smacked for IV. This is rally confirming for SPX. Up and down for SPX is a more healthy trajectory than straight up in the short term. The VIX curve is in a steep contango, though less steep than last week. With VIX higher the backend is cheaper this week. That’s a real reduction in volatility. [.]( Closing VIX curve, Jun 23, 2023 [.]( Closing VIX curve, Jun 30, 2023 Last week’s take- “The VIX curve is back into a steep contango and VIX drops now will be hard won so don’t expect an 11 handle until we have had 1 week of going nowhere fast for SPX.” The steep rally will keep VIX from 11 once again, and .50% pullback will get VIX into the 12s. Earnings season is about to start and that is usually vol killing. I’d guess next week will be the local low for VIX until traders gear up for Big Tech earnings. I predict a 12.5 VIX low by Thursday. Let’s Go! [/campaigns/org775804783/sitesapi/files/images/774695510/ag (2).png] Pit Report: A Cheap Bet on DraftKings A little known fact about me is that I was an early investor in offshore gaming way back in the internet infancy. It was the mid-1990s and all was going well – we were about to IPO, and I was going to cash in on the internet boom. Then the Feds came, sent by the NFL, NBA, MLB and the NHL to shut down online gambling. A $1 billion pre-IPO value went to … zero. Oh well. All the stuff our offshore internet site pioneered is around today in the guise of DraftKings Inc (Ticker: DKNG). If you play online poker, you’re likely playing a robot. All the stuff we were shut down for is now 100% legal. DKNG has the good fortune of being around after the USA passed online gambling in many states. Their only real trouble is they spend too much on marketing. [ 1 year DKNG chart with 30 day IV and 20 day HV However, there are things to buy in DKNG options. [Let’s take a look.]( - AG Power Income: Is the Economy Really This Good? What a week for stock prices AND Economic Data! The last time we heard that was two years ago and the data this week including: - Weekly Jobless Claims reported at +239K, versus 265K in the prior week and the largest decrease in 20 months. - U.S. Housing Starts rising to 1.631MM, which was up 5.3% Y/Y and the highest level in twelve months. - Q1 GDP revised higher to a 2.0% annualized from 1.2% in the prior report and - Durable Goods Ex-Transport all accelerated in May Leaves no doubt the FOMO rally is kicking into a second gear. However, you must keep in mind that this one event can change everything in a heartbeat. [Today, we’ll review this percolating disaster and how it will unfold.]( - Griff Profits In Pumps: Did You See That? As options traders, we all know what volatility is. At least you should and if you don’t shame on you! Here is the definition taken right off our [Option Pit Glossary](which is completely complimentary on our website (aren’t we generous): Volatility - How much a stock, option, or another asset moves. Volatility is often “mean reverting,” which means it tends to move back toward the average after a big jump or drop-off. Talk about volatility, did you happen to catch the morning action in Bitcoin (Ticker: BTCUSD)? Holy shitake … as Andrew would say. It started five minutes after the stock market opened. Here is the one minute candlestick chart: [ Those are one minute candles!! BTCUSD dropped $1135 in seven minutes!! Tried to recover before dropping another $500. In 14 minutes, BTCUSD sold off $1633 or 5.2%! That’s some volatility. The sell off was prompted by the news reported by the Wall Street Journal that the SEC rejected the application filings by Blackrock and Fidelity for Bitcoin ETFs. Trading BTCUSD is not for the faint of heart. It proceeded to come back to unchanged by the end of the day trading $30,500. Believe it or not the bullish chart is still intact, in my opinion. [Continue here and I will show you.]( - 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: Leaning: A trading term to indicate a directional bias, up or down, but the trade direction is hedged to some degree where the position can get back to a flat direction on an adverse move. A security or option “can be leaned upon,” where the trader uses the option or security to “get out” of another position. [( 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. 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