December 19, 2011
Good morning. The market posted a pre-holiday loss last week, with the SPY down 4.46 (3.5%) to close at 121.59. The VIX, however, was down 7.9% to close at 24.29, reflecting investor anticipation of markets entering a more holiday (meaning quieter and less volatile) period leading to the New Year. That would normally be the expectation, but the last few years have been anything but “normal” so if the premium levels decrease too much it might be worth putting on a position that would benefit from some unexpected movement.
December 5, 2011
Good morning. It was a huge week for the market last week, with the SPY up 8.52 (7.3%) to close at 124.86. That number represents a gain of 2.3% over the last two weeks, and a decline of 1.4% from the close three weeks ago on 11/11. The VIX last week dropped a full 20% to 27.52, indicating strongly that the market perception of risk, at least in the short term, has dropped significantly. Why the sudden change in market attitude?
November 14, 2011
Good morning. A nice Veteran’s Day rally on Friday had the SPY closing up on the week after a serious down move on Wednesday following a spike in Italian debt rates to well over the supposed 7% danger level. The SPY closed up 1.18 (.9%) at 126.66, with the ranges being a low of 122.86 on Wednesday after a high of 128.02 on Tuesday. The VIX was up slightly (.11) to close at 30.15, but had a spike to 36.43 during Wednesday’s sharp sell-off. In general the market remained driven by news from Europe, but it does seem that, in the absence of bad news out of Europe, the direction appears positive.
October 31, 2011
Good morning. It was a huge week for the market last week, with the SPY up 4.63 (3.7%) to close at 128.60. That strong up move was accompanied, as it often is, but an even larger downturn in the option premium levels as defined by the VIX. Those levels, the so-called fear index, were down a whopping 22% on the week to close at 24.53, the lowest close since August 4 of this year. Quite obviously the combination of headline news items associated with the sharp rally were the announced framework of a resolution to the Greek debt issue and some slight increase in the tone of domestic economic reports.
October 3, 2011
Good morning. Quite a week in the market last week, only to have the SPY down less than a point to close at 113.15 (.3%). If you had any positions, it certainly felt a lot different than a flat week, with the range of 112.98 (Mon.) to 119.56 (Tues.), and a huge rally Thursday in the last hour only to be followed by a large sell-off into the close on Friday. The VIX continues to be at very high levels, closing up 1.71 at 42.96 (4.1%). These levels of the VIX, compounded by a fairly pronounced skew going out, surely makes it tempting to try and maintain short premium positions in the weekly SPY options, but those positions (due to amazing intra and inter-day movement) are not for the faint of heart.