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Volatility Update: VIX Trades From One Extreme To Another

Volatility Update: VIX Trades From One Extreme To Another

What a difference a few weeks can make! In late June, CBOE Volatility Index (VIX) rallied to the mid-20s and its best levels in months. Indeed, the market’s “fear gauge” had been ticking higher leading up to the U.K. June 23rd referendum and then continued its move through two days of heavy selling in the stock market beginning June 24th.

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Events and Options: Are Long Straddles Risky Around Earnings?
July 19, 2016

Events and Options: Are Long Straddles Risky Around Earnings?

If a stock’s going to make a move—perhaps because of an earnings announcement or other upcoming event—then why not buy a call option in case it goes up and a ...

Got Leverage? Portfolio Margin versus Regulation T Margin
July 12, 2016

Got Leverage? Portfolio Margin versus Regulation T Margin

How can an individual trader get risk-based margins like a market maker without owning (or leasing) a seat or trading on the exchange floor? Portfolio margin ...

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Options Trading Game Plan for Earnings and Elections
July 11, 2016

Options Trading Game Plan for Earnings and Elections

Last quarter we wrote an article ahead of Q1 earnings season and discussed how to use risk-defined option strategies during earnings. We want to expand on ...

Volatility Update: The Highs and Lows in VIX Year-to-Date
July 8, 2016

Volatility Update: The Highs and Lows in VIX Year-to-Date

The U.S. stock market ended the second quarter in dramatic fashion after the S&P 500 (SPX) staged an impressive three-day rally amounting to about 4.9%. ...

Reversion to the Mean: Taking Volatility to a New Level
July 7, 2016

Reversion to the Mean: Taking Volatility to a New Level

You’ve probably heard that volatility is mean-reverting, which is trader-speak for “it goes back to where it usually is.” But what does that really mean? And how ...

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Noise and Sound: Deciphering the Intent of Unusual Option Volume
June 30, 2016

Noise and Sound: Deciphering the Intent of Unusual Option Volume

Market watchers sometimes look to trading volumes in stocks and options as possible indications of market sentiment. For instance, relatively high volume ...

Volatility Update: VIX Jumps After Brexit Vote; VXEFA Spikes, Too
June 30, 2016

Volatility Update: VIX Jumps After Brexit Vote; VXEFA Spikes, Too

The CBOE Volatility Index (VIX) reached four-month highs late last week. As stocks across the globe faced a day of heavy selling pressure, currencies gyrated ...

Trading Options by the Calendar: Time Can Be a Trader’s Friend
June 27, 2016

Trading Options by the Calendar: Time Can Be a Trader’s Friend

The calendar spread is one of the most common income generating trades. Perhaps it’s because calendars may be easily adjusted. Or maybe it’s because calendars ...

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Volatility Update: Implied Volatility Breaks Out
June 23, 2016

Volatility Update: Implied Volatility Breaks Out

CBOE Volatility Index (VIX) moved above 20 last week for the first time since February. VIX wasn’t the only implied volatility index moving higher ...

Volatility and the Risk of Options Skew in Calendar Spreads
June 22, 2016

Volatility and the Risk of Options Skew in Calendar Spreads

There’s an important concept that options traders who trade calendar spreads should understand. It's called skew. Skew is used in a few different ways, but in this ...

Implied Volatility: Spotting High Vol and Aligning Your Options
June 16, 2016

Implied Volatility: Spotting High Vol and Aligning Your Options

Implied volatility is like gravity. You can’t directly observe it, but you know it’s there and it’s measurable. And it’s pretty important, too. Just as gravity impacts ...

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Volatility Update: O Vol: Where Art Thou?
June 16, 2016

Volatility Update: O Vol: Where Art Thou?

The recent grind higher in the S&P 500 has been slow and methodical, leaving volatility traders in a tight spot. Might a pick-up in volatility be right around the ...

Volatility Update: Correlations Drop and Markets Meander
June 9, 2016

Volatility Update: Correlations Drop and Markets Meander

Many measures of market volatility are near lows for the year despite recent rounds of murky economic data, uncertainty on the interest rate front, and ...

Understanding the Rule of 16, Options Volatility Skew, and VIX
June 7, 2016

Understanding the Rule of 16, Options Volatility Skew, and VIX

Modern investors get frequent updates on where the CBOE Market Volatility Index (VIX) is trading. Some even refer to the VIX as the “fear index” because it ...

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Volatility Update: Five Indicators to Watch Right Now
June 2, 2016

Volatility Update: Five Indicators to Watch Right Now

The “summer doldrums” refers to a sometimes seasonally slow period on Wall Street when the weather outside warms and volumes slow as traders ...

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