Latest news with #OptionsPit
Yahoo
07-05-2025
- Business
- Yahoo
How to play options post-Fed decision
00:00 Speaker A Well, the Federal Reserve keeping interest rates steady, and Fed Chair Powell highlighting that the central bank's policy is in a good place until further clarity is comes amid increased economic uncertainty. For more and how investors can dip into the market post Fed, we have Vice President of options at Simpler Trading. That's Danielle Shay joining us for the Options Pit sponsored by Tastytrade. Danielle, thanks for being here. So, in the wake of that Fed decision and the press conference, um, what are you seeing in terms of volatility? What have you been seeing recently? And how should people maybe play it, uh, play sort of the broad market based on what's going on? 00:48 Danielle Shay Well, the market's still trying to digest what was said today, but overall, I think that the move was largely positive. We're sitting around the highs on the day today. And what's really interesting is that in the options market this week, we've had options traders coming in and buying puts. And so what we're seeing is we're seeing some short covering. And, you know, when you have a Fed announcement and the news isn't worse than was expected, often times you can get that short covering, especially when buyers come in. So I'm looking at, uh, placing a butterfly in the SPX with an upper price target around 5700 for the end of this week as the market digests this move and trades a little bit higher with that short covering. 01:49 Speaker B And Danielle, you also say for trade you like Bitcoin here to the upside. Walk us through the trade there. 02:01 Danielle Shay I like Bitcoin for a longer term trade. If you look at the weekly weekly chart of Bitcoin futures, what you're going to see is just an absolutely gorgeous trend. It's consolidating. It has pulled back in the context of that trend. And if you throw some Fibonacci levels on there, you're going to see a price target of about $120,000 a coin. So I think that that is a great long-term price target. I'm talking about probably mid summerish, um, as far as that goes. And what I like to do is I like to trade this in the options market. There is an ETF called IBT, uh, that you can trade in the options market that is significantly cheaper and it allows options traders to get in and trade this ticker to the upside. 03:13 Speaker A And so talk to me about the levels that you're looking at with, and I know that that when you're looking at it, you're not going to do the option on the Bitcoin futures. That goes on Ibit, which is the I guess the biggest ETF, right? That's, uh, that's cash Bitcoin for lack of a better word. Um, so what kind of strategy are you looking at there? 03:47 Danielle Shay Well, when you look at this ticker right now, it's trading right around 55. And so what I like to do is I like to identify the upper price target. Um, in this case, that's going to be around $65. And so what I like to do is I like to place an at the money butterfly. You can also use an at the money call debit spread, but essentially what you would do is you would buy the 55 strike, and then you would sell the 65 strike because that would be your price target. And then if you want to make a butterfly instead of just a call debit spread, you would buy another strike equidistant up above. And what that does is it just it really brings your cost basis down. So for this kind of trade, you can get in for around $2.75 a contract. So that makes it accessible for a lot of different options traders. And of course, if you have a larger account then, um, that's when you can increase your contract size. 05:02 Speaker A Danielle, I'm going to circle back around to the broader market to the S&P 500 specifically, where you were talking about that sort of potential upside here from there. But 5700 isn't that far above where we are right now. So I'm curious what you think that sort of longer term trend looks like, given some of the options activity that you've been seeing. 05:31 Danielle Shay Of course. So for me, it really just depends how far this short covering can take us, because what we really need is we need a catalyst to get us through this area of overhead resistance. The 5700, 5750 level is a critical zone of resistance. And what we need is to get up to that zone and then be able to break through it on high volume. So for me, as far as the longer term plan, it depends entirely on if that can happen or not, because as you know, we have sell in May go away. Um, that can be a seasonal factor that comes through. We also have, uh, major catalysts like Nvidia earnings coming through. However, I am bullish Nvidia, and I love the segment that you just did right before me. So I'm hoping this is going to be a bullish catalyst for the market. Uh, but ideally we can get some bullish catalyst, break through that area of resistance, and continue correcting, uh, to the upside and retracing this move that we've had due to all the tariff fears.
Yahoo
16-04-2025
- Business
- Yahoo
Making sense of the action in the VIX
The CBOE Volatility Index, also known as the VIX, helps traders gauge the level of expected volatility in the stock market. The VIX has spiked since the announcement of President Trump's tariff plans. In the video above, Prosper Trading Academy CEO Scott Bauer helps investors make sense of the action in the closely watched index. To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime here. The market has seen outside swings to both the upside and downside due to tariff whiplash. The volatility index soared last week to the highest since early 2020. That's according to Bloomberg, as investors continue to grapple with uncertainty. Where does this leave the options market? Prosper Trading Academy CEO Scott Bauer joins us now to discuss in the Options Pit sponsored by Tastytrade. Scott, it's good to see you so uh. You too, Josh. May I start here, Scott? Listen, um lots of volatility in this market. What kind of opportunities do you think, Scott, that that presents to investors, especially maybe Scott investors who are who are listening right now and and they're new to options? Sure. So if you're following the VIX and I'm standing here in the VIX pit at the CBOE. If you're following the VIX, something to remember is if you see a VIX more normalized long term around 16, that's equivalent to about a 1% move in daily moving the S&Ps. 32, which is pretty much where we're at right now, that's a 2% daily move. 48, 3%, so on and so forth. When we see this elevated level 30 or above, it typically does not stay here very long. In fact, if you look at historically going back to when the VIX started back in in the mid to early 90s here, uh above 30 is, you know, maybe it stays for a few days, maybe we see a week. And then we normalize here. In fact, over the history of the VIX, anytime it's really soared and it's gotten above 50, which is really kind of a capitulation panic level for most investors here. That year, the returns and moving forward have all been positive. So is this time different? You guys were just talking, maybe this time is different. You know, when we go through these cycles, we always say that, whether it was COVID, whether it was, you know, the Y2K issues, whether it was a great financial crisis. Is this time different? Maybe. It's it you know, I'm not an investment advisor, I'm a trader. So it's easy for me to just say, hang on, hold on in there. The opportunity really is though, quite frankly, to sell some volatility. Kind of a broader question, Scott, too, just why I have you. I mean, you have been, listen, Scott, you've been thinking about, studying, and trading these markets for a long time. Especially in a day like this, I think a lot of people, some people at least, they, you know, investors get nervous when they see a day like this. Just broader, Scott, I just it's really what you make of these markets. Well, it it's difficult. It's really difficult to be honest because we really haven't been through a time before, regardless of the periods of time where we've seen the VIX spike, where we know the markets can change in a heartbeat, literally in a second on a tweet, on a you know, a news clipping. We have not been through that before. So I think this time going through here, that uncertainty is heightening that VIX level, is heightening, you know, some some of the nervousness that people are feeling out there. And the fact that we keep seeing changes almost on a daily basis coming out of the administration is also a very unsettling feeling. This too shall pass, but is it going to be a matter of days, weeks, months? Is it going to continue through the end of the year? I can't tell you that. I know that the opportunities to trade though are excellent. The markets in the VIX, the markets in the S&P, they're deep, they're robust, they're liquid. So as a trader, it's great. If you're a longer term investor, you probably just got to look historically and say, all right, I'm along for the ride. And Scott, we were talking earlier about semiconductors and the different opportunities there. I know you have some ideas around TSM. Can you give us some trade color on that and what you see in the options market? Absolutely. You know, it's really tough just because of the the constant news cycle. If it weren't for what's going on right now, I have no qualms that TSM would be a $200 plus stock. But we do have, you know, the current news cycle to contend with. Earnings tomorrow morning, I want to be long this stock even in the face of everything that's going on. So what I am doing is I am selling tomorrow's, excuse me, next week's expiring 150, 140 put spread. $10 wide put spread. Could have done that for about three, three and a half dollars today, which was a lot of premium. I normally would not sell a put spread that wide, but looking at this stock, I want to be long this stock 146, 147 area if it were to come down there. So I don't mind selling this put spread, getting the extensive premium, and then seeing what happens. Again, if I had a longer time horizon on this, if it was more of an investment than a trade, I would probably look at it a little bit differently. Scott, great to see you and have you on the show today. Thanks for joining us. Thanks so much.
