According to options traders, stock markets are going to get really interesting very soon.
There has been talk of Wall Street headding towards another crisis, with murmurs here and there talkng about bubbles similar to the dot coms and the MBS'es. Another murmur is now doing the rounds, that the stock markets are going to get real interesting really soon.
The CBOE Volatility Index, also known as the "Wall Street Fear Index", is a measure of how much investors expect the S&P 500 to swing over the next 30 days. It's been at a steady low level for most of this August, and the S&P hasn't progressed more than 1% in either direction since early July. But according to an article on Wall Street Journal , options traders think that that's going to change really soon, and have been active on countering those fears.
Call options on the VIX have suddenly increased, and traders are readily betting on the volatility to increase . Compared to 330,000 call options ordered just by midday on Tuesday Aug 12, which is more than 1. 5 times the normal daily amount, only 83000 put options were placed.
The top two trades bet on the VIX doubling by September, with many others betting on it increasing even more. Currently, the VIX is at 11.5, and the last time it crossed 20 was when the Brexit was announced.
So what do you guys think? Is there any specific trend or bubble that is perhaps not as obvious to the normal public which is obvious to these options traders? Or is this just speculative trading?
It's very likely to be something along the lines of "vol is low --> buy vol"....
Yes. The European banking system is in big trouble. It's just a matter of time until the tree starts to shake. Go long on vol and you will make a killing
Would you short Deutsche Bank, Barclays and other European Banks by buying put options?
Yes. But keep in mind many of these banks are already trading at new lows. I wouldn't buy close dated put options, out of the money long dated should be good punt
I think option traders are buying Vol because it's low and the market hasn't seen a pull back in sometime. I just bought put options on the SPY because the Vol was so cheap and the market due to have a pull back soon.
Good timing. I'm thinking of going short futures on the S&P - but we could see a decent short and sharp thrust higher before the next capitulation leg starts - so be careful.
I mainly bought the spy puts to hedge market risk, because I bought 58 shares of LMT to get the 10% premium tender offer to transfer the shares over to LDOS. They are doing a reverse morris trust transaction and it should take a few weeks for my shares to transfer over and I wanted to hedge my downside risk.
It's been interesting since August 2015 tbh
I think they have absolutely no conception of what is happening, and fundamentally fail to understand investor perspective.
Super NNW individuals at this point are not worried about growth.....they know that there is a storm coming between civil unrest and government that is increasingly displaying fascist tendencies, so they are in survival mode.
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