🚗VIX Hits a One-Month Low

[] [The daily rundown of everything happening at Option Pit.]( [.]( MARK-et Open Hey OP Crew, AG’s alter-ego Vol Man here with my weekly analysis. As usual, I will start with last week’s forecast… Last Week: I am convinced the Friday action was geopolitics, not market fundamentals. This Gaza issue is getting more complex as the USA jumped into the fray. On the flip side, SPX is getting into oversold territory with decent corporate earnings. Interest rates seem to have stabilized this week, albeit at a lower level, so that should help stocks. If, hopefully, the Middle East situation does not get worse, we should see a modest rally in SPX this week with VIX below 19. If the Middle East gets worse, except the same VIX curve we saw on the close Friday. The modest rally I saw was a parabolic launch and VIX crashed below 19. Thank J-Pow and good earnings for fueling the rally. The Middle East did not get worse, as in expanding outside the Gaza theater. It got worse for the average Gaza citizen who always seems to bear the brunt. But stocks didn’t see it that way. Stocks rally after the tanks roll, and as I have said many times – once the tanks roll, the vol folds. I’ve seen that going back to my early floor days in 1991. This week was no exception, as SPX regained all the ground it lost over the last two weeks. In my view, stocks have gotten past higher rates. The Fed Gov spending issue is not going to be an issue until it is. Or they stop it. [ SPX daily price action over the last 30 days [ SPX sigma (Vol per term average) levels over the last 30 days. Sigmas crashed … probably too low for the Nov cycle in my view with realized vol still higher. I had noticed – and written – upside options still had a solid bid so the vol crash in 2 week options might be premature. Mark and I had good success this week in Trading Desk buying strangles in the Mini SPX Index (Ticker: XSP). 10-day realized vol is 18% mostly on the back of huge rallies this week. Implieds are trading well under realized vol so that could make VIX sticky this week. [ VIX cratered this week with the rally and Middle East fears subsiding. Contango is back to near normal so that is bearish VIX. [ VIX curve, Nov 03 2023 [ Closing VIX curve, Oct 27, 2023 The contango front is usually a slower VIX and likely to decline. I estimate it’s 1 point per week of VIX drift until it hits the 30 day realized vol, all things being equal. Last week I mentioned the flat curve usually means an unstable VIX. Boy did we get that! [ VIX 30 day chart with 1 min candles The term relief rally is over used but apt to describe the action this week. The 3 big ifs that drove stocks lower – earnings worries, rate worries, and the Middle East – didn’t get worse from a market point of view and actually improved. Earnings were okay, J-Pow doesn’t need to raise rates now that the bond market is taking over, and sadly the Middle East is the same as it was 20 years ago. The low VIX level put a stamp on that so it would take new bad news to move the needle. I am going with the 14 handle for VIX this week and another 1 or 2% for a rally for SPX. Most of the big earnings are out and Nvidia Corp (Ticker: NVDA) does not report until the 21st. All of a sudden, a 4500 SPX by Dec expiration doesn’t look crazy. Let’s Go! [/campaigns/org775804783/sitesapi/files/images/774695510/ag (2).png] Trader's Edge: Big Movers from Friday - Weekend Watchlist Mark Sebastian here with your weekend watchlist. Today, I’ll be breaking down: - The levels I’m watching in the market for next week - The top 5 stocks I have my eyes on - What you should be looking for in the VIX on Monday So [click here]( to check it out. - Mark [( Pit Report: Is Vol the Boss of MOS? Every once in a while, stocks get super cheap. Usually, it’s after they’ve been super expensive. One such stock is Mosaic Inc (Ticker: MOS). In the run up to the Ukraine invasion, fertilizer stocks went nuts as Russia is a big supplier of the basic materials. That supply was soon cut off.. MOS went on a huge run only to get chopped like a lot of stocks when traders ran for the Magnificent 7. Earnings are coming out, and IV is a bit elevated in the longer term. It’s not as high as it was last week, and nothing like the runup to the March 2022 mess in Ukraine. [ 1 year chart of MOS with 180 day IV Is the new IV level a buy or a sell? [Click here for my volatility analysis.]( - AG Power Income: Did Yellen Pull the Rug on the Dollar? A couple of legendary traders — Stan Druckenmiller and Paul Tudor Jones — sat down for a chat this week. Here is what was said about Janet Yellen. Stan said: “Janet Yellen was issuing short-term bonds at .15% when she could have issued long-term bonds at 1% … I literally think if you go back to Alexander Hamilton, it is the biggest blunder in the history of the Treasury.” This message is important for you is that it reveals how scared Yellen is of issuing long-term Treasury bonds (USTs) … Why? Because doing so will drive systemic losses among the buyers of US bonds. We already witnessed this in March ’23 when losses on USTs contributed heavily to the failure of several major banks. Well guess what? The Federal Budget Deficit has increased to $1.7 trillion and that gap must be filled by issuing more USTs. [Today, I’ll show you how you can capitalize on this “forced” money flow.]( - Griff Profits In Pumps: Old Resistance = New Support Again … WOW! This has become a runaway market. On Thursday I said the next resistance on the S&P 500 (Ticker: SPX) was $4334. Well … look what happened: [ That’s EXACTLY where we opened! This provides more credence to this support/resistance level. Now that we are above this level, this is our new support. The next level of resistance comes in at $4384 and above that $4450. It’s too early to tell but could this action be creating a reverse head and shoulders pattern? Do you see it? Time will tell … [And of course, I have a new trade idea for 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: Collar: This is a short call, long put strategy, where the put strike is below the current underlying price, and the call strike is above the underlying price. Mostly these are done against stock, or as a form of options insurance, on a 1:1:100 call/put/share ratio. [( 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. Option Pit LLC is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented materials. Specific trading ideas or strategies discussed in the presentations or materials are entirely illustrative and do not constitute the solicitation of a transaction (or transactions) or a recommendation to execute a particular transaction or implement a particular trading strategy. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions. Want to change how you receive these emails? You can [Unsubscribe]( or [Update your preferences]( This email was sent by support@optionpit.com. 1-888-872-3301 [Option Pit]( | 190 S LaSalle Suite 3000 Chicago, IL 60603 | [Privacy Policy]( This email was sent by support@optionpit.com to {EMAIL} Click here to unsubscribe | [Manage Preference]( Daily Newsletters ex. Vix Edge, Pit Report, Profit in Pumps, Power Moves, Power Income, etc. Option Pit | 190 S LaSalle Suite 3000 Chicago, IL 60603