Historical Volaility on the Rise, Volatility is Still Alive!

Index products are converging with one another and this yet another example that we are about to enter into a period of extreme volatility. Let's take a look at historical volatility over the last 20 years. Notice that all of the "all time highs" in the last 20 years also had just entered a phase…

What to Expect in AAPLs Earnings

It's earnings season and we kick off with the grand daddy of them all - AAPL! Many think that around earnings you should only sell premium. That is plain old stupid advice given by those that don't know any better. Let me tell you right now that trading earnings is not a bathrobe. One size…

Common Sense Isn’t So Common These Days

Whenever you notice people have stopped applying common sense to their investment decisions, it might be a good time to go looking for an exit. Here’s something you might not have noticed today: So that’s Santander Consumer and it’s down sharply after announcing it would delay reporting Q2 results due to ongoing discussions with accountants.…

Post-Pokemon Panic, “Crude” Realities Weigh On Sentiment As Central Banks Eyed

“Monday, Monday, can’t trust that day.” Global markets are off to a shaky start in a week that includes a Fed meeting, a BoJ meeting, and some key economic data out of the US. As Deutsche Bank’s Joseph LaVorgna writes in a note from the future (note the highlighted commentary in the image below), “Friday's…

Theoretical vs Historical Probabilities

Earnings season has kicked into high gear. How do you know whether or not to sell premium on high implied volatility stocks going into the earnings announcement? The trading technology out there focuses only on theoretical probabilities. However, what if you looked the actual historical probabilities based on historical data? Would theory match reality? TheoTrade…

Don’t Confuse Your Politics With Your Trades

It’s often difficult to talk about the interplay between politics and markets without ruffling a few feathers. But you have to be able to separate your politics from your trades. You may think you’re unequivocally right in your political convictions but guess what? If the majority of market participants don’t agree with you, and if…

Your Guide To Next Week’s Fed And BoJ Pow-wows

Get ready for another week dominated by central banks. What else is new, right? We’ll get the Fed on Wednesday and the Bank of Japan on Friday and make no mistake, these are important meetings. As you’re probably well aware, the FOMC has increasingly embraced its role as the guardian of global stability or, perhaps…

“Trade-Offs”: The UK Sends A Subtle Warning

You have to love Richard Breslow. He’s a former FX trader and fund manager and he now writes daily commentary for Bloomberg that usually hits our inbox at around 3:30 a.m. It’s almost worth staying up for. We quote him often and today he didn’t disappoint. Here’s an excerpt: “After the BOE and ECB meetings,…

Matching Strategy to the Market Character

There are two types of market that we have seen over the last several years. They have been either quiet and trending or sideways and volatile. It seems to me that markets may have broken out in another quiet and trending market. With volatility we like to use a combination of calendar spreads and directional…

Goldman Has A Simple Message For You: Buy Puts Now

One of the rather disturbing things about today’s markets is that the sellside is increasingly incredulous and confused about what’s going on. To be sure, you always want to approach anything the Street says with an appropriate level of caution - that is, take it with a grain of salt. That goes double if you’re…