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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.
Zawya
10-04-2025
- Business
- Zawya
Trump reveals his pain threshold, backs down on tariffs: IFR
So the Trump put does exist and we have a measure for the US president's pain threshold. The latter lies somewhere around the S&P 500 sliding 15% in less than one week, the dollar turning lower, and Treasuries starting to wear the weakness elsewhere. We know this because the US backed away from its trade war, Trump announcing on his Truth Social platform a 90-day PAUSE on its tariffs programme for most countries, being those which have not retaliated so far, basically leaving China as the odd one out. Reciprocal tariffs have also been lowered to 10% over this period. Granted there does seem to be some confusion here (!!!) given the baseline tariffs were established at 10% with the reciprocal tariffs being announced as targeted and increased additional measures last week, so President Trump does appear to have mixed up the names of his own programmes. Regardless, one can fret that this is only a pause, and what will remain for Europe considering the reversal is specific for countries which have not retaliated against the shift toward a more hostile US trade policy, whilst Europe has in fact announced a targeted, albeit delayed, response of its own. Leave that for another day because the S&P 500 soared 9.5% on the news, and who cares if S&Ps have slipped back more than 30 points or 0.7% through Asian trading? Global bourses have followed suit; Eurostoxx50 futures are up 7.5%, and the Nikkei is up more than 8%, although the CSI300 is showing more moderate gains of 1.2%. Treasuries are also finding relief, 10-year futures up ¾ point from their settle, but up a more slight 1/5 point from when Europe went home. Bunds in contrast are getting smacked, down 120 ticks from their settle, although some allowance should be made for Treasuries getting hit after Europe's close by Trump's tariff reversal. Long-dated JGBs meanwhile have had another wild ride, 30-year yields ranging from 2.58% to 2.81%, but the high fell just short of Wednesday's high and the market is ending slightly lower on the day around 2.67%. For all this good news, however, the dollar is slipping again, the index dipping to DXY102.57. The yen is stronger, at USD/JPY146.65, and so are the euro and the pound, at EUR/USD1.0991 and GBP/USD1.2865. Gold is also bouncing, up to $3,115.69, flirting with last Friday's highs, while oil is easing back after Wednesday's big bullish engulfing, Brent crude down $0.76 at $64.72. Today Can we pretend it's all over and the last month or so was just a bad dream? To a greater extent, for the near term, we probably can. Riskier assets can continue to stabilise, and global markets can become more orderly again. But such chaotic policy making will not be completely forgotten, and nor will the desire to completely shift the paradigm for international trade as well as to dismiss if not walk all over historical alliances. If global markets were already losing liquidity amid so much volatility, then this aspect of trading is likely to get a little bit worse still today given the proximity of the US CPI report tomorrow. Heaven forbid a stronger print comes out (Reuters consensus +0.1% m/m and +2.6% y/y, +0.3% m/m and +3.0% y/y for core), which may be seen as restraining the Fed's choices and highlighting the stagflation theme. BNP Paribas meanwhile in its CPI Preview published on Tuesday afternoon wrote that it expects: 'April CPI as the first potential data to reveal impacts from the administration's auto and broader reciprocal tariffs.' Granted, Trump's reversal should prompt some relief here and potentially make the data somewhat outdated; why worry about tariff-driven inflation if the tariff threat has been reduced and delayed? Yet decision makers, whether on a personal or a business level, will have already been framing their minds with respect to expectations for inflation, and this is to say nothing of what is likely to prove a greater and more lasting hit to confidence. Back to today, however, and a bit of supply does feature as Spain will tap €5.5bn–€6.5bn of its 5/29, 10/32, and 4/35 bonds. Also, it will presumably be worth keeping in mind that Italy will proceed with its mid-month auctions Friday morning, when it taps €7.25bn–€9.0bn BTPs out to the 3/38 maturity. Both auctions are at risk from bidders not wanting to participate amid so much global volatility. There are those – especially primary dealers – who have to participate, but they can be assumed to be wanting to run shorts into the auction process, and use the incoming paper to cover their positions, to the extent they may want to lighten their shorts. Indeed, consider the 'super-competitive' nature of the larger government markets in Europe, where dealers are having to chase client business in the secondary market and also chase auctions to keep their dealership going. Away from this, with respect to Spain at least, bidding is expected to come largely from Spanish accounts, although the non-competitive option is viewed as 'super attractive' for fast money amid so much volatility. Otherwise, the Spanish taps should go well amid reinvestment needs even if we aren't particularly close to month-end; in this respect, note the auctions have been pushed forward a week (and come on the heels of last Thursday's taps) in respect of Holy Thursday next week. Also helping are the chance to take down blocks of paper in a single showing (as auctions present a 'liquidity event'), and interest in taking Spain as a proxy for less liquid markets like Portugal. Cheaper valuations may also of course attract interest, but this is something of a double-edged sword given the cheaper valuations result from all the global volatility referenced above.
Yahoo
07-04-2025
- Business
- Yahoo
Put buying surge signals market fear as people seek 'protection'
Stocks (^GSPC, ^IXIC, ^DJI) turned negative again, with the S&P 500 and Nasdaq Composite showing slight declines. Tastytrade CEO JJ Kinahan joins Catalysts to discuss the recent options activity, highlighting the rise in put buying as a sign of increasing market fear. To watch more expert insights and analysis on the latest market action, check out more Catalysts here. Stocks are back to being in the red. Uh now that we have been talking a little bit we got your S&P off about uh three tenths, seven tenths of a percent in tech heavy Nasdaq off about seven tenths of a percent. But I do want to bring our guest host Chris back into the conversation. Chris, how are you thinking about this move this morning and anything that you want to ask JJ as well in terms of the options action? Well, I I I am I totally with JJ. I understand the point. There's a lot of volatility out there. It very quite right. I'm curious though about how much put buying you think the market's done in aggregate? Because obviously it's a terrific indication of fear and it was building last week. Would you would you say we've almost done enough put buying? I mean that's often a sign the market needs to find a floor at least temporarily. Well, yeah, and and and you know, you did you did see people buy more puts and calls. I think you have to be a little bit careful of looking at that Chris for one reason and that is you you're not sure why people are buying them and what's on the other side of the trade again options being a derivative product. You're never quite sure what people are doing it for. But to your point, we saw the biggest amount of options ever trade last Friday. We saw puts and calls fairly even, which you don't normally see to your point Chris. It's usually more calls than puts. So people have actually absolutely been coming in for protection. And so, you know, you you're seeing VIX hold up. When you see VIX hold up, shows me that they may not be as aggressive in their buying, but they're certainly there to buy. There are very aggressive bids for puts. It's not backing off at all. People want protection. And quite honestly, people may want protection both ways because we've had we just saw how quickly the S&Ps can rally 200 points and come back down. So you may see people who are buying both sides or if they're long stock, selling their calls in order to buy puts because they want that protection and they just don't want to pay a lot for it. Sign in to access your portfolio
