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What the FOMC Did to Volatility

Thursday, September 19, 2013

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I'm attaching a cross asset volatility monitor that allows you to compare price and volatility changes across equity, commodity, and currency markets. After Wednesday's post-Fed rally, several...

A Tepid Tuesday

Tuesday, June 10, 2008

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The market was flat/down today, discouraged by the news that a certain Presidential candidate would, if elected, “veto every single beer.” Just a gaffe, sure, but did you know that if you drink Magic Hat (pictured) then the terrorists will win? You mean Vermont separatists aren’t terrorists? Whatever. All I know is that they have beards and don’t like Toby Keith. Close enough. The other Presidential candidate has the power to decimate entire industries, just by being. The…

Pop ’til You Drop

Wednesday, April 30, 2008

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It was a Fed day classic. Punters buy, buy, buy just before and immediately after the release of the FOMC policy statement, hoping for some kind of surprise (or surprise reaction) that will spark a rally. Then when the smoke clears to reveal that nothing at all has changed – except that the market is still overbought – buyers disappear like ghosts, and Kenny Rogers knows when to run. Lessons to be learned? You bet. If…

Reduce Delta Exposure Ahead of the Fed

Tuesday, April 29, 2008

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If you’re not already in a pretty delta-neutral place, think about balancing things out tomorrow ahead of the 2:15 fireworks. We closed out one of our newsletter positions today for a small loss so that we can ride through the rest of May expiration with less risk and little concern about the magnitude of any market reactions. We won’t do the reversal readings tonight, suffice to say that (with the exception of the QQQQs) the indexes have worked off…

Panic and Euphoria at the Disco

Monday, April 28, 2008

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This week should be pretty volatile, with plenty of government data, earnings announcements, and Fed action to push markets to and fro. Many traders are paying special attention to the GDP announcement Wednesday morning and the FOMC news later that afternoon. As is our wont, we advise taking off some risk ahead of Fed meetings. Markets were very quiet until the last forty-five minutes today, trading on very light volume, and the S&P 500 emini futures weren’t able to…

Spring Migration

Friday, March 28, 2008

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By the first half of 2006, before the Federal Reserve had even stopped raising interest rates, economists were beginning to recognize where things could very well be headed: monetary policy easing, forced by a slowing economy and tightening credit, would both put downward pressure on the dollar (which already had resumed its decline by the end of 2005) and cause yields on U.S. Treasury bonds to plummet. The inflation risk was obvious to any educated consumer watching the news,…

Weekend Reading: Gold, the Fed, and Position Management

Friday, March 21, 2008

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A couple people vehemently disagreed with our post suggesting a cautious entry into gold this week. Maybe they’re right: maybe the commodity boom is over, maybe the housing troubles and liquidity problems are a thing of the past, and maybe the Fed is going to start getting tough on inflation at the next meeting and will start raising rates. And maybe Mount St Mary’s will beat UNC tonight and go all the way to the finals. But at least…

Bonus Trades: short Fannie Mae, long Gold

Wednesday, March 19, 2008

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Two directional trades we’re looking at today that are both consistent with the story that this week’s positive action is just a brief pause in a longer bear market. Gold Thesis: Gold has been almost unbuyable for months as it kept hitting new highs – if you weren’t in already, it was pretty tough to get in so late in the game. This week may be your opportunity, as the Fed decision caused the biggest single-day plunge in gold since…

This Junkie Market

Tuesday, March 18, 2008

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Just a quick note tonight. While the rally today was certainly fun for any long deltas you have lying around, it wasn’t necessarily impressive. There is significant resistance overhead, we didn’t take out any major resistance levels today, and there isn’t much to look forward to on the horizon: LEH bought itself a reprieve, and may survive this economic cycle. But that doesn’t mean disappointing news from financial institutions is over. The economy stinks, and just about everyone now…

Contradictions Everywhere

Tuesday, March 18, 2008

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Futures are up big pre-market, though there’s no guarantee those gains will stick. Lehman and Goldman seem to have dodged the bullet for another quarter, and both are up significantly premarket. We’re looking for positive trading most of today, with some selling possible after the Fed announcement at 2:15. We’re selling small into strength today, and adding to directional positions as more selling likely unfolds through the remainder of the week. But if all that sounds uncomfortably close to a…

Sitting On Hands

Monday, March 17, 2008

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Today, the Dow had a trading range of 319 points, which by itself isn’t that amazing (the range last Tuesday was 419 points), but keep in mind that futures were down 200+ points last night and this morning, and the Dow managed to close in the green by 21 points. Of course, all of the other major indexes didn’t fare as well, with the RUT down 1.87% and NDX down 1.55%. SPX was off by 0.90%, but managed to…

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Jared Woodard specializes in trading volatility as an asset class. With over a decade of experience trading options and other volatility products ... Read More

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