Vix trading is usually smart money. Here is an update from Phil's stock world:
VIX- Declines in the tech and financial sectors bridled hopes of a very meaningful recovery in stocks today (despite a modest close higher), keeping the composite measure of implied volatility in the S&P 500 well above the 20% line to read 23.12 by day’s end. Late last week we noticed a strong current of VIX call buyers positioning for further turbulence in the S&P in June and July via call options near the 30-line. With today’s revelations out of Lehman Brothers keeping financials tethered to the downside and the spread of losses to other consumer-exposed sectors, traders have extended their volatility-bullish outlook by trading heavily calls at the August 27.50 strike on a volume 3 times the open interest. These contracts, which switched hands 16,000 times, commanded premiums of $1.50 per contract – a price reflecting about a 40% chance of VIX closing above 27.50 by August 19.
VIX- Declines in the tech and financial sectors bridled hopes of a very meaningful recovery in stocks today (despite a modest close higher), keeping the composite measure of implied volatility in the S&P 500 well above the 20% line to read 23.12 by day’s end. Late last week we noticed a strong current of VIX call buyers positioning for further turbulence in the S&P in June and July via call options near the 30-line. With today’s revelations out of Lehman Brothers keeping financials tethered to the downside and the spread of losses to other consumer-exposed sectors, traders have extended their volatility-bullish outlook by trading heavily calls at the August 27.50 strike on a volume 3 times the open interest. These contracts, which switched hands 16,000 times, commanded premiums of $1.50 per contract – a price reflecting about a 40% chance of VIX closing above 27.50 by August 19.
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on Tuesday, June 10, 2008 at 6/10/2008 05:35:00 PM.
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