Weekly options coming strong
Guest post by Vix and more.
When the CBOE made a push to expand interest in weekly options about two years ago, their efforts were initially met with a fair degree of skepticism. Over time, however, weekly options have found a dedicated following, with the CBOE “weeklys” growing from 1% of total volume to about 15% today. Two years ago there were a handful of index weeklys, as well as a handful of weekly options based on ETPs and individual stocks. The list of weekly options changes every week, but the current list for weeklys expiring on May 4th now includes options on six indexes, 26 ETPs and 119 individual stocks. What was once a curiosity is now a groundswell.
Personally, I have found quite a few uses for weekly options. On Tuesday, for instance, I tweeted that the VXX 18/19 call spreads had the same price for the weekly options as next month’s standard May 19th expiration.
Part of the appeal of the weeklys can be seen in the graphic below of the skew in Amazon (AMZN), where today’s April 27th weeklys (red line) have a huge implied volatility (and therefore price) premium to their counterparts with more distant maturities. Looking at the graphic, one can see that it is not that difficult to construct positions with weekly options (which also include the May 4th options, shown with a yellow line) in which one leg has implied volatility that is 50-100% higher than another leg. If you have a bias toward selling options, as I do, this can sometimes offer up an irresistible mathematical edge.
Fiat Currency Structure Failure
Risk on, risk off, risk on, risk off and so the story goes on.
Daily trading has been rather volatile over the past weeks, and liquidity pathetic. You don’t need much capital in these markets to dictate the price.
Although people still judge the economy by where the SPX trades, we would like to repost the chart that sums it up pretty well.
Presented first time in 2010, the “fundamental” story is intact. After Spain comes Europe core, then US, Japan and finally the full blown currency crisis. Until then, algos will continue ruling the markets.
Chart courtesy Gordon T Long.
The Midas touch-Swiss style
Beside the first shock when the Swiss central bank decided to punish many, and the central bank’s wife speculating in currencies, we haven’t heard much regarding the Swiss central bank. All seems stable, at least on the surface… From Golem.
Another update from Switzerland.
Sometimes people forget the point of the story of King Midas. And by forgetting, they make the same mistake as Midas. How often have you heard someone say, “He has the Midas touch you know”, meaning he’s rich and knows how to get richer. Whereas the story of Midas is how once the king had the ‘gift’ of being able to turn whatever he touched into gold, it killed him because everything he tried to eat or drink also turned to gold.
And that is what is begining to happen to Switzerland. Just as with King Midas there may be some unforseen consequences to having the Midas Touch.
You might think that Switzerland of all countries must be riding high. After all Switzerland and its currency are seen as safe havens and so money has flowed there in rivers. It is an open secret that wealthier Greeks, Spaniards and Italians have been spiriting their wealth out of their own nations to hide it away in Swizterland. Capital flight from all parts of Europe to Switzerland is hardly news.
Biderman talkt to Martenson
Debt, inflation, gold and much more in this video worth watching. Video below.
Gold’s Value Today
Guest post by Azizonomics.
Way back in 2009, I remember fielding all manner of questions from people wanting to invest in gold, having seen it spike from its turn-of-the-millennium slump, and worried about the state of the wider financial economy.
A whole swathe of those were from people wanting to invest in exchange traded funds (ETFs). I always and without exception slammed the notion of a gold ETF as being outstandingly awful, and solely for investors who didn’t really understand the modern case for gold — those who believed that gold was a “commodity” with the potential to “do well” in the coming years. People who wanted to push dollars in, and get more dollars out some years later.
2009 was the year when gold ETFs really broke into the mass consciousness:
Gold and Silver Charts
Gold is trapped in a quite big formation that could be breaking sooner than later. With the positive trend intact, we could see gold take a quick jump to the upside.
Silver is building a base at these levels. 30 is the crucial level that must hold.
Gold and Silver charts below.
Unemployment rate-one of few things pointing higher in Spain
Spain 1st quarter unemployment rate at 24.4%. Compare this to 22.9% in Q4 2011.
Youth unemployment in Spain close to reaching 1 million. Current rate at 52%.
Chart Scott Barber of Reuters.
Spain joins the “B” Club
Although not overly unexpected, S&P delivered another downgrade of Spain. Leaving the fine A club and joining the B club, this only shows how badly run the world’s 12th largest economy actually is. The Trader still believes majority of the analyst community still underestimate the bad loans, the state of bank’s balance sheets and the mentality of dealing with economic reality in Spain, from politicians, companies, down to the average person. The boom has ended, and the hang over is just starting. Despite all this, the top news in today’s version of El Pais, is regarding king Juan Carlos and the status of his hip after the big game safari in Botswana.
Tic tac tic tac as PIIGS yields spike further.
News That Matters
All you need to read and more below.
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