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We'll also bring you exclusive conversations with the traders, researchers, and asset managers who are reshaping the volatility landscape. If it involves volatility, then you'll find it on Volatility Views. And now, it's time to take a deep dive into the world of volatility. It's time for Volatility Views.
Alright everybody, that music can mean but one thing, it is Friday, it is noon central, it is 1pm in my current time zone, the eastern time zone, yes it is time once again, to talk about a little bit of volatility. My name of course, Mark Longo from theoptionsinsider.com.
If I sound a wee bit different, and I probably do is because I'm coming at you not from the Chi-town studio, no, but from the southern studio here in sunny and ridiculously warm triple digit Orlando, Florida for the STA national conference. This conference has been evolving over the years. When I first went years ago, I was kind of the only options guy in the room. These days, it's like a mini OIC that most of the exchanges are here, most of the options personnel are down here.
It's becoming much more of an options event. You'll see as you hear some of the shows, some of the shows have already hit obviously from what we've been recording down here in the studio at STA. More to come, they'll be hitting the pro side first. Some of those already making their way to the pro. If you want to check those out early, of course, get access to options oddities, which is already actually up on the feed as we speak now.
I had an early options oddities today, as well as so much else, theoptionsinsider.com/pro is the place to go to learn more. As we learn who's joining us on the old program today, first, let's go out to the hinterlands of Chicago, where we are joined once again by the once future and present Dr. Vixx. He moonlights in a little bit of V stocks. Mr. Dr. Vixx, welcome back to the show, sir. As always, thrilled to be here. I'm actually kind of glad I'm not down there in Florida with you.
It sounds very uncomfortable. I mean, it's like 90 here in Chicago. It was freaking hot. Where they had outside people were I think I think melting is the technical term. Yes, it was very, you know, down there. It's not so much the heat is just how freaking hot it is. You know, it is a swamp. So that doesn't help. That doesn't help with the with the true when it's triple digits. Yeah, then you're then you're really feeling it. I don't know if he's feeling it down where he is. Let's find out.
Let's go out now to the southern volatility Mecca known as Austin, home of last year's RMC, where we are joined once again by the greasiest of meatballs. Mr. Mark Sebastian from option pit.com. Mr. Meatball. Welcome back to the show. Are you going to RMC this year? I believe it's in Utah. I don't think so, but you never know. Maybe I will. You can walk to Utah from Texas, right? I mean, it's like it's like oh yeah, super close right down the street, right down the street.
Austin super, super close. That's how that geography of the western states works, right? Just walk right over there. Nothing. Nothing to see over there as we keep on rolling ourselves. We're going to get to the volatility review. It's time to break down the latest developments in the volatility trading world. It's time for the volatility review.
All right, everybody, let's get down to business time for the volatility review of the portion of the show where we break down what's trading and what's trending and what's going on from unusual activity and all sorts of fun perspectives in the world of volume. Of course, we got another hot one in store for us this week. It was Fed Week after all. That usually tends to drive some action, drive some paper this week. No exception, of course.
A half point coming in hot from Powell and company this week. Most people were leaning towards a quarter of a point, even at this time a week ago. We did see a pretty marked shift in the Fed Watch in the intervening days leading into the session where all of a sudden the half point was becoming more and more in favor. Clearly that was the right choice in hindsight, at least from a lining up with Powell perspective. Market had some fun digesting it at first. It rallied.
Then we saw a pretty aggressive sell off towards the end of the session. Then of course, yesterday, the bulls just got the bit in their teeth again and everything was up strong. S&P north of 5,700. New all-time highs close to across the board out there. Then coming into today, it seemed like maybe the bears were going to turn it down a notch. They came in hitting everything. We got back below 5,700 again, which just saying that out loud sounds crazy. It wasn't that long ago.
We were threatening 5,100 in the other direction. So breaking through 5,700. Oh my God. Dogs and cats living together. But we did that this morning. Got down to around 5,680 or so before it looks like the bulls have the bit in their teeth again turning the S&P back around. S&P is still red right now, off about 0.15%. The Nasdaq still read off about a third of a percent. But it was right across the board. The Dow has now ticked green up 0.15%.
So we'll see if it's one of those days where the early sell off was a head fake or perhaps say a portent of things to come. Vicks at about a 1585 when we kicked off the show. So back at a 15 handle, that puts it down about two thirds of a point from where we were this time a week ago. We seem like we did a lot of living over the span of that intervening week. But back to 1585. Did you have a VIX of the 15 handle listeners? I guess we'll find out in the crystal ball in a little bit.
Vvix 97. So back down from triple digits, but just ever so briefly down about three points from where it was this time last week. So a lot to unpack. Let's go around the horn. Let's start with the once future and present Dr. Vicks. First off, your thoughts on our Powell & Company exceeding expectations at least from a week ago and going the full half point and the markets reaction from there. And what else is catching your eye on the ball front this week, sir?
The derivative markets were pricing in 50 basis points for some time. And I know most people take a look at the CME Group one. The one on Bloomberg, I feel like is a bit more accurate because it's taking in more than just the CME markets. And that one's been pointing to 50 basis points for a couple of weeks. And I feel like the true volatility event would have been which is real easy to say in hindsight.
But I was quoted in the press saying that if they did face 50 basis points, it probably wouldn't be a huge reaction and the market would consider it somewhat of a relief because that's what the market wants. And I mean, Powell has snuck this in every once in a while, but he doesn't surprise us that much.
You know, I think if you're betting on Powell surprising you, 19 times out of 20, you're going to be disappointed because as much as the poor guy gets criticized, I mean, he is very straightforward with pretty much here's what we're going to do. I think almost to the point where people start to have to make some stuff up just to make him more interesting. You know, like me versus Mark Sebastian, you got to make stuff up about me because I'm nowhere near as interesting as Mark Sebastian.
Does he have raging head trauma? I don't think so. So there you go. Bam. No, he doesn't got your winning and you're winning right there, sir. But I went on that one. How do you imply that there are markets outside of CME Treasury? Mark, what are you saying, sir? There's nothing I I am a I'm a free agent and I still get nasty notes from from exchanges every once in a while. But I just call it as I see it. And I'm not badmelling CME.
I'm just saying that and it's a great tool, especially because it's free. But it gives you a little bit different forecast than some of the option adjusted spread stuff that you can get off of Bloomberg. Yeah, you're right. It was because even as recently, I think as our volbues last week, it was still leaning almost really like yeah, yeah, 75 percent. And the quarter basis point or 25 basis points, it wasn't until later that we saw that swing closer to 50.
I was surprised at how how strong it was towards 25 basis points, quite frankly. So, yeah, interesting stuff out there this week from Powell and company. We go down now to the land of the Southern Volatility Mecca, which we have established earlier in the show is just a short brisk walk from Utah so he could easily walk to RMC.
Mr. Mr. Mr. But you estimate on the option block if you have any further thoughts on what power and company did surprise not a surprise and then Be what caught your eye in the?
Volatility tumult that followed sir. Yeah, you know You know typically the first reaction is the wrong one and we were ended up kind of up and then down You know going in options expiration, I'm not surprised that we were a little bit bullish Going into quadruple witching especially coming out of this But you got to wonder you know I actually would have liked to seen a quarter basis point relative to a half
I think the half tells me that they're a little more worried about the economy than maybe they're letting on And a quarter would have just said hey, you know, we're bottoming now. We're gonna slowly move things You know, I was looking back. I have not seen a lot of precedent for a We are you know, we were we raised 14 months ago and now we're already going to a quarter basis point Many times I don't know Russell if you've seen anything like that historically
Other than you know when there's been some issues. So it just has me just has me thinking a little bit maybe Maybe they're a little more nervous than they're letting on and I'm wondering if the market once we're free of expiration Is could start wondering the same thing That was the concern right half basis point signals look out below because there's there's more lurking in there than perhaps we know Speaking of looking at the past as prologue
I saw an interesting write-up the other day and maybe kind of just just shake my head like what are we doing? It was an article entitled I believe it was how Nvidia has Performed during past rate cuts and I was like really are we doing this? When's a lot first off?
When's the last time we had a big rate cut like this and then see be it was a very different Nvidia back then Talking about mobile chips and maybe a little bit of crypto versus now all AI yet They're somehow trying to tie the two together, but that's where we are right now listeners as we keep on rolling
Let's see where we are in the volatility surface. Shall we listeners and Spoiler alert, but we're down a little bit, but not a ton We had a step of course rolling off the board this week So October slotting into that pole position and coming it to show time it was down but down slightly In fact, we're down about the same and the oc and the no cycle both of them down Right around two tenths of a point Scrolling on out here through the rest of the term structure all the way into
Almost halfway through next year and we and once again, there's no no 20 handles to be found Looks like we top out at almost in 1918 80 back in or out in May of next year But outside of that not a heck of a lot going on. Mr. Mr. Doctor Bixar What's catching your eye in a gentle drift lower on the term structure this week?
You know the one thing that I was kind of thought we would see I didn't want to make the bowl bowl prediction But I thought we might get ack below November After the Fed was out of the way and then that that just didn't happen yet It'll get there, but that just didn't happen yet. So 20-cent spread as I look at it right now and and I don't know what I'm gonna be fixated on after October expiration, what will I look at? Yeah, I know what are we gonna do here? We've been talking about
Expecting somebody in the chat to pop in there and go Russell, please freakin talk about something else. Um, I will tell I will tell you that the December discount to November Is a little interesting It's all you know, it's about a dime right now and Normally, you know normally we see a bigger divot than that But I I wonder if and and I was watching my buddy cat temp I'm on Joe Rogan and they were talking about potential post election
Physical volatility. Will there be pallets of bricks dropped off in the big cities again and all that kind of stuff So, you know, maybe December is holding up a little bit more again due to the election uncertainty and And what I do think it's gonna take to get that out of there is just a decisive outcome one way or another I'm personally at the point where I just want to know that night I don't care which two of these awful people ends up being the net being president
Do I see you're with me and the none of the above camp? Hey, hey, somebody told me they were voting for me yesterday Alright in there you go. I yeah, I might read like right us right and and and and Mark Sebastian you actually know this person So oh really? Well, you just gave me idea now. I've got a candidate I can believe in that's it. There you go There we go. They've always tell me they send me a few write-ins every time but I have yet to count up my writing
I might actually have a handful maybe a dozen votes were present. So there we go That might count for something and maybe I can get a free coffee at Starbucks, but mr Yeah, you're right the pallets. I forgot about the pallets of bricks. Yes That was that was all the talk in Chi town leading into DNC there come the pallets of bricks Hopefully we don't see but maybe you know what we had fun back in 2016. I don't know mr. Dr
Bic should we do another live election night special? It was kind of fun last time even if I've Did you Okay, look at you you're planning my schedule for me. So there we go. Oh, yeah You know, I just kind of assumed you would want to so it is one of those years this year
Yeah, are we gonna see Matt? I mean listeners we want some fun go back and check out in the archive Maybe we'll repost it make it easier to find the 2016 live special that that Russell and I did even that's why I Joe I talked about people say they know who's going to win right now We didn't even know even that night member Trump's don't seem like a distant long shot Hillary was still in the lead until you came on this
I think it was you came on the show partway through and said I think he just won Ohio and that's when That's when it became real the first time. Oh wait Yeah, we we got really lucky on that on the timing that evening and the fact that I'm sober Yes, that's true. That's true. The sobering has helped mr. Mr. Meatball, sir What are your thoughts on what we're seeing out here and the term structure and the fact that you're right
We've been fixating on October for so long. We need something else to look at. Well, hopefully we do we'll see what happens Yeah, I mean, I think October is Really lining up to start easing off here. I think you're gonna start seeing some pressure here. I really like I I think
January is the contract. I like to own I like short I like Short ock long either nove or Jan I think no view actually the no future is actually the one that's gonna move with the election That's the one that I would actually want to want to own I understand the October will kind of reflect what November options are showing But by October expiration, you know, it's October 16th, I believe is that correct?
Yeah, that's an early one. Yeah, we're still like three weeks out. I don't think it'll really have that really well priced in yet and So I'd rather be trading in November and really I think if you want to kind of encapsulate everything January is gonna give you that clean look at kind of the entire process so I Ross Russell you'll like this I put on a short October UV XY long
Long January VIX VIX call spreads. That was kind of my my my my leveraged short term short vol long term own own January play I
Like that one an awful lot. I've been I've been looking at the the midterm ETFs a little bit as well Just you know because they they focus on that farther part of the curve and they're probably not going to have a whole lot of reaction In October November regardless of what's going on But you know if you if you're maybe want to have short term long volatility and longer term short volatility You can you can put that sucker on and that maybe offset some of your long short dated long volatility
With the drift lower by the longer dated stuff I Yeah, I got a nice list of things to do always and when I really want to dig on is You know where you know, where are we with respect to? November option expiration and the election and November option, I mean right now At the Friday weeklies are the ones that you probably would start to play and they're available We've got November believe November 6th options are right after the election, right?
I'm trying to do a calendar thing in my head all at the same time But if that's happening and those are the options that people start to take a look at Yeah, the actually they would be November 8th options They haven't listed those yet, but they do have options already available expiring the night of November 6th on the SPX which is the day after the election so We might be able to start to get some insight from you know from just the option pricing on those
Hmm and the other point behind that is I and is I you know Those are not those aren't the options that are gonna be feeding into the October expiration So that might you know if you're gonna play it and they're starting to make these expirations that are available Right after the election, you know, hopefully we know the outcome That that might start to take some of the interest away from the October futures
Well, there's always interest in what's popping off out here in Vix land listener, so let's get to that now
Is it a banger day out there for VIX options so far? The answer is no I mean when you compare it to the ADV, which is continuing to come back down from its Ridiculously lofty heights of August which again saying that out loud also sounds crazy But the ADV is coming in another sixty eight thousand or so this week to nine thirty four still Robust still threatening a million contracts a day, but that puts what we're seeing today for 26 and a little bit better context
We're almost halfway to the ADV. So if you see it from that perspective, it's it's about what you would expect out there But you know, what's never what we expect, which is why we do it listeners. It is time for Russell's weekly rundown Russell's weekly rundown Russell's weekly rundown All right, mr. Rhodes you have the floor 40 minutes of Russell's weekly rundown goodness go the floor Oh my god, you know what? We could actually do that
Is that much I guess it was a Fed week. Oh, yeah. No, um, so I you know you the way that I judge the weekly activity is I I download the week the weekly trades from From Bloomberg and you can only download 20 at a time So I have to download 20 and then you know cut and paste and all that kind of crap This is the first time that I had to download five pages of weeklies and that was from Wednesday
So there was a whole lot of trading. It was horrible trading on Wednesday though. So let me backtrack a little bit Nobody traded the weeklies fairly well around the announcement around the Fed announcement
Mostly bullish VIX trades. In fact, I had a hell of a time. I was I was trying to offer some guidance to a reporter on Monday And Tuesday around the Fed and I couldn't find a really big bearish trade in the VIX complex to save my life So on Monday trade, I really do not like and I'm explain why I don't like this one somebody with VIX just under 17 somebody came in about 5,000 of the September 25th 22 calls for 45 cents and sold
5,000 of the September 25th 25 calls for 26 cents. They only paid 19 cents for that My issue with that and really my issue if you're trying to play a volatility spike With options you're better off just buying an option You're better off just buying a call Because let's just say you know VIX had spiked up to 23 or 24 right out on
Wednesday and they still had a week to go. I don't know they paid 19 cents for this thing I don't know how you know if they would have been able to get out get out of it too Well, you've got the skew where your short options are gonna have higher implied vol Than your you know, then the long options in this spread. So, you know if you're gonna play something like this
That 19 cents or the 26 cents of income that you're taking in. I just don't think it's worth it. I Personally think you want to have something that's that's very directional around that It might hurt you a bit more in the long run, but that but it is what it is on Tuesday And this is kind of the kind of the kind of trade that I would like somebody with VIX at 559 somebody came in bought 2,000 really late in the day of the October second 17 calls for a buck 64
That would it know if we got in a decent move to the upside on VIX those would have done All right, I would have preferred the September 25th calls, but maybe they were hoping for follow-through Maybe they've got their eye on something else toward the end of the quarter or something like that On Wednesday Wednesday was a huge huge huge day a lot of late-day selling of out-of-the-money calls basically because They they weren't paying off
So a lot of bailing out on a lot of different out-of-the-money calls starting starting about 330 or so Which added to the volume there?
Nothing really significant yesterday and then today I did I did find a trader that had That purchased 1100 of the September 25th 18 calls on Tuesday They paid a buck seven for them and they got out today and they sold those at 54 cents and again You know that I mean that that those options held their value a little bit, you know, they go off the board next Wednesday and of course, you know Bix didn't spike but you know it but but and if it had
You know if they had sold some options against those 18 calls I just worry about how you go about monetizing that if you're gonna do something like that You want to go old-school Jim bitman?
bitman used to like to Buy a call spread and if we got a big move in one direction He would turn it into a bearish spread during the week Expecting that we talked out at some point so if you're gonna do something like Buying the 22 calls and selling the 25 calls 25 is should be your price level where you think we're gonna top out and Maybe you sell that in the money call and buy a farther out of the money call And and try to play both legs of a VIX spike in a big VIX reversion
Yes, I remember you like to over bees fly from a few weeks ago. I did and I straight vertical Not the straight vertical not a fan of the snow No, and again that that one left you some really nice upside He also that one was not if I remember correctly that one wasn't necessarily pinpointing an event Although his timing was absolutely impeccable. I almost feel like he needs to be dr. VIX now not me but
His timing was really good on it. We just got kind of an unexpected spike I think the trade was on with the anticipation that we would get a quick move up at some point Maybe even through the Fed net announcement I can't remember the expiration dates on those but it wasn't quite the same as targeting us You know extra volatility around the Fed and then we didn't get the extra volatility around the Fed. That is true
It was more of a less situational I should say but intriguing stuff. Nonetheless. I liked it. It worked out pretty well So I think I've all yeah all of our listeners who put it on Did pretty well on that one. Let's see what's what's going up. What's doing well in VIX options this week
Listener, shall we coming into Showtime? We are hanging out a seven to three calls over put so put still fairly well represented in our Top ten but not quite the four we had last week or 50/50 we had not too long ago But we are starting to come back down the other side of it listener
So you'd expect some of those some of those puts to go off the board. Let's start number ten. It cost you 91,000 contracts to break into the top ten in VIX land this week So starting to come back to earth a little bit that gets us to the oc 21 So right back to a little bit of upside if you want more upside, how about number nine?
200,000 exactly of the Jan 42 halves the meatball was saying he likes Jan now maybe maybe he likes the Jan 42 half You know, he loves a good a good far out of the money strike number eight 203,000 of our first of three puts on the list the oc 16 puts number seven 225,000 of the oc 50 so right back to the upside goodness number six 229,000 of the oc 20s a number five two hundred thirty six thousand of the no doubles the no 55
So we are all over the upside this week listeners number four two hundred thirty seven thousand of the October 19th number three twenty fifty nine thousand of the oc 18 puts who would trade the oc 18 puts in October in VIX I mean what kind of a madman would have those in their back pocket number two two hundred seventy two thousand of the oc 15 puts now we're talking 15 and then what the big dog out here this week Listeners a much smaller obviously with SEP rolling off the board
285,000 of the no 35 has been a while since we've been this light for the number one spot 285 So intriguing stuff are quite the smattering. We're all over the place. We got a bunch of puts. We got 35
We got doubles. We've got 42 half's 21s 20s even some 19 sprinkled in their listeners So you really have an embarrassment of riches on the top 10 this week Unfortunately, not really an embarrassment of riches on the volume front this week, which again That week you'd be forgiven for expecting it certainly in the latter half of the week some paper to kick in
I know earlier in the week. We had some some lightness out there some of our guests in the studio this week were lamenting the Just sit on your hands attitude a lot of people were having this week going into the Fed We didn't see a lot of paper going up with the exception of Tuesday I think you can probably guess why in a second But it was a light week and even coming out of the Fed not exactly light in the world on fire like today
426,000 contracts on the tape. We are still kind of whipsaw on a little bit out there So you think maybe a little bit more paper, but not today or the big dog today? 25,000 of the oc 17 puts I hope those blow the doors off a number two forty three thousand of the nove 17 puts number three 22,000 of the oc 18 puts again only a madman would trade that strike number four 14,000 of the oc 22s and number five thirteen thousand of the oc 40s. I don't know maybe maybe mr.
Rhodes likes that vertical the oc 22 40 he loves a good of the money vertical as we just heard Thursday 679 thousand on the tapes again Right after the Fed we saw crazy whipsaw the day before yesterday of course was a full-on bullish mode day Vicks historically doesn't love that and that was the case again yesterday 679
Thousand contracts on the tape of the big dog though. There was some there was a big print 107,000 of the oc 21s that was nearly 1/7 of the paper going up yesterday Then next we have number two 61,000 so getting cut pretty much in half with the oc 18 puts number 350 6,000 of the oc 18 calls number for 38,000 of the October doubles so you know what?
Knows too far for you you like a little bit of double strike though 38,000 of the oc doubles are your huckleberry yesterday and the 24,000 for number five of the October 30 calls Wednesday Fed Day I Get it people sitting on their hands the first half of the session because they're waiting for the big announcement Second half of the session we're whipsawing all over the place balls moving things are rocking and rolling
You would expect maybe a little bit more paper on the tape than six hundred and fifty four thousand contracts
That's pretty much what we got listeners the big dog again, you know Fed Day. It's kind of it's kind of crazy We actually had to you know, double check these numbers just to make sure everything was working and it was 44,000 of the oc 19 calls that is your big dog on a hotly anticipated Fed Day where they surprised a lot of people I won't say everyone obviously but a lot of people and Going half point as opposed to quarter point
44,000 of the oc 19 that's the best we could muster number two thirty nine thousand of the oc 19 put so 19 strike Where the action was on Wednesday number three thirty six thousand of the nove. Oh, here we go. No of 85s That's what I'm looking for on a Fed Day and those were all opening in case you needed confirmation of that because of course they were but 36,000 of the nov 85 calls If I had to guess that's probably the other half of something that didn't make it into our top five in the past
These have been ratios. So let's hope it's some Really funky ratio. Maybe they're going back to that stupid. We were talking about before the spying all the other money strikes number four we got 35,000 of the oc 17 puts and number 5
34,000 of the oc 25s Tuesday was the big dog. We actually got an M handle for the week 1.01 million so just barely making it of course Tuesday heading into Sep roll and off the board there and 98,000 was the big dog on Tuesday of the sept 20s a number two seventy eight thousand of the sep 17 puts number three 46,000 of the oc doubles once again, what's with the 55 strike this week listeners?
Are we in that are we in that range again? Are the 55 starting to look attractive number four forty two thousand of the sep 18s and rounding out the top five on pretty much the most active day of the week forty thousand exactly of the no 37 calls so once again, we are all over the place Monday kicking off Fed week with not really a bang Not really a whimper kind of a shrug your shoulders not even hitting the adv that day though 701,000 contracts on the tape on
Monday the big dog 54 almost 55,000 of the sep 17 puts followed by number 240 almost 41,000 of the d20s number three 37,000 of the oc 50s So right back to the upside list and number four thirty seven thousand of the oc 19s and number five thirty two almost thirty three thousand of the sep 18 so And we were all over the place on that
That paper this week listeners pick a strike and it probably lit up our top five somewhere this week. Mr. Meatball kind of a strange smattering of paper this week including I'd hate to say the return the revenge of but a lot of funky upside doubles 50s Are we in that time of year again, sir? No 85s. Is that what we're looking at now, sir?
You know It was an interesting week, I mean it's ahead of the Fed you expect to see kind of some funky paper interesting today the biggest trade was a buyer of the October 17 puts outright by of about 80,000 of them so to Russell's point they It looks like they bought those and sold so Russell you actually you'll like this
There this is the biggest trade of the day. They did this kind of near the open. They sold 39,000 of the no 17 puts at 196 to buy 78,000 of the ox 17 puts at 86 cents I like that as a kind of curve flattener trade makes a ton of sense to me That one that might be my favorite trade of the week and it just went up today Yeah We had on third on third on Thursday Seller of the oc 18 puts to buy the oc 21 puts on a ratio. Not sure. I love that one lots of oc 55s
October 30 is going up. Definitely another busy one On the 18th ahead of the Fed yeah a lot of out-of-the-money stuff you kind of expect that because Nobody knows exactly what's gonna gonna happen. So they're thinking. Oh, that's the Fed I don't know what to do and then yeah more of that as we head in mark This isn't VIX, but I thought it was kind of interesting prior to the prior to the Fed and
This is kind of along those lines. It's definitely a ball play we saw In an ETF that doesn't trade a lot of options MTU M momentum I want to say it was
Wednesday they did the trade. Yeah Wednesday. They did this kind of weird ratio bearish condor II thing that points toward and momentum basically is You know, it's a high beta stock stocks that are gonna be moving higher and they were setting up in this near retreated ETF a bunch of bearish put like a bearish complex put trade makes me wonder whether you know people are getting a little nervous for October Yeah, we don't talk about the the iShares MSCI USA momentum factor ETF
That often say that one five times fast listeners. I'm guessing not a ton of paper going up there on a regular basis Let's see. What is the what is the ADV and everyone's favorite? Oh 2,300 is more than I thought 27 contracts today though. So looking
Looking kind of light out there today, but you're right. That is kind of funky also that that put spread you talked about was funky I know for a lot of our listeners that kind of reverse calendar gives them the heebie-jeebies They can't wrap their head around being long the near dated contract and then short the longer dated one It's kind of backwards to them But in the case of VIX where we're seeing the term structure looking the way it is
That makes a certain amount of sense. So would you say that's your VIX trade of the week, sir that reverse calendar? Yeah, I really I think that's that might be my favorite area of the week. I'd love Russell's opinion on that one Mr. Rhodes, are you down with that? And then also you mentioned here our chat some data you've crunched about Historic vol sellers drying up after vol events. You want to share that with our folks? Stick with what Mark Sebastian was talking about there for a second
So I was looking at the momentum ETF just to get a quick handle on it. What trade did you say you saw? One night they bought the 190 puts So the 188 puts the the one has bought 5500 the 190 is an arc So the 188 sold the 184 is bought the 180 twos 5500 by 3850 by 3850 by 1650
And that's and that's gonna help them on the downside. Correct? Yep Yeah, that's and that's exactly what you would want to do from a from a fundamental standpoint and I'm shifting my I'm putting on my academic hat here but you know you probably if if if if that's right and we're gonna see the kind of slowing that they indicated by Admitting that they think they're gonna have to cut more than then they had been saying they were gonna have to
you're gonna be more interested in value stocks than momentum stocks and I think you know a bearish position in momentum It might even be a good hedge if you've got a well-diversified portfolio Where you you know, that's where you're identifying an underperforming factor over time
You know in the academic space everybody loves talked about academic about factor investing. I honestly had not looked at factor ETFs Thank you for creating more work for me this weekend and then just you guys were talking about how the volume in the VIX complex has been a little anemic and you know, I did work for SIBO for a little while and Goodness knows that when you know, whenever VIX volumes were not going particularly well, there was always the what the heck's going on here I
did a little I did a little volume study a while back and looked at after we get what I refer to as a volatility event and we did have a volatility event in early August it does frighten out some of the Volatility the short volatility guys In fact, you saw the number of shares outstanding on SVI X go up and then come right back down just a couple of weeks after That volatility spike where where some people try to take advantage of it and then some other people just bailed out the best they could
and I think that my theory has always been a Fewer fewer people that are willing to get short volatility Results in VIX or the VIX derivatives being a bit elevated price wise for some time So the law anybody's thinking about doing something longs maybe not particularly interested and it just takes a while for all the participants to Reenter the market and the average I came up with back in the day was five months I always seem like it took about five months before we got back to
record volume or close to record volume After 2020, I think it took a longer time than that. So I don't know if that pattern holds up anymore But I do think that's why every week that I've been on now that I'm on it seems like I went every week Which is great. Don't take that as a complaint. It seems like when you start to go through the volume
We're talking about how it's a bit anemic. I think we had one really busy week since early August and I I'm going with what we figured out back when I was at SIBO and then of course the next step We were trying to figure out from firm risk management If if SIBO as an entity should be doing any sort of corporate finance hedging trades
To offset lower volumes after the volatility spikes. We never really came up with anything cool with that or If they're doing something around that I'm not there to do it anymore interesting That's that's the long shot. It was typically about five months and and then also that was going through You know when I was at SIBO helping promote VIX You know volumes just grew and grew and grew and it was all cuz of me Everybody knows I'm being sarcastic, right?
But um, but we were on a really nice upward trajectory that trajectory is not the same anymore So that five month again might not hold up But we would always see a drop-off in volume after a volatility event just took a little while for the sake of the show Let's hope that data is no longer accurate sir five months gone. We
Mr. Trump and mrs. Herra or miss Harris, they'll make sure We said that last time you said that in 2016 We said the one thing Trump is not is not a single-digit VIX president and he turned out to be Exactly that so it's amazing how he may not have been all that bad, huh? It's crazy. I'm staying out of politics, but you know If you like a vix going to like terrible VIX going to nine and sitting there forever, I guess yeah
He was awesome. But yeah, talk about a surprise development. You mentioned as VIX. Let's get on to your beloved as VIX 2860 right now. So
Climbing that wall back up. I think I have a few vestigial calls in my back pocket I have to babysit those today see where I can get those off But up six-tenths of a point was literally hunched right as we kicked off the show As as Russell alluded to volume kind of coming back down the 80s 11,000 contracts right now down 5,000 from where it was this time of week ago That's a huge chunk coming off the top in that's VIX. They cannot afford to shed
5,000 contracts a day in this product. They need to go the other way today also only 5,000 contracts on the tape So yeah, if you're looking for s VIX liquidity to improve This is not the trend you want the big dog out there right now. Sep 40s 3,300 of those bad boys looks like they're going the way of the dodo unless we have if we hit 40 by the end of the
Day today, then something is really going going wonky out there. Mr. Meatball You've been all over s VIX these days with your latest addition to the pit offerings What's catching your eye out there in s fix land?
Well, you know when you look at the numbers you're saying s VIX should be screaming higher But then you realize that there's this weird kink from the election That is keeping s fix from doing that but you know if you look it since kind of bottoming on on 99 it's it's up What call it $3 and making that nice slow progressive progression higher?
you know and on a daily basis it is going it is moving higher and I expect that to continue to to to gain higher we use a Calculation we called our yield zone right now that is in our in kind of the sweet spot So if there we are currently just long the shares Yield zone. I like that. It sounds like like something at a theme park the hit the yield zone dunk the person in the booth
Mister mister Rhodes, sir. What's what's catching your eye? You still long s vixen writing calls you up to something else?
Yeah, I got some 28 calls. So I will and when I say got that means I'm short So I'll I'll be down to about a half position Honestly, I have been pretty much working down all of my positions I I just sometimes I feel like it's time to start things over and I've As soon as I get out of everything the SMP 500 will go down 30% because I've been fighting short with the SMP versus short volatility at the same time and it's it's wearing me out so I'm uh
I've been thinking about doing a reset for the last quarter of the year and And so I probably will not replace that s vix. I'll just like I'll still well I know I'll still have like half a position in it, but I've been taken I I'm usually Very well invested like have a bunch of different things going on and right now I've got I've got the short volatility ETF. I'm short the SMP 500 futures and I'm short China and that's it
Shorted it all normally. Normally. I have five to ten different kind of macro type positions on but I've I've been scaling back a bit part of it. So I'm doing a lot of conference traveling. I am going to RMC. Oh I don't think I am but I'll have to out to confirm with the with the super producer what the travel schedule is But why would travel why would travel curtail your trade? I don't understand to a conference like why I'm why would be doing it cuz cuz cuz a lot of things
I'm joking. Okay, obviously get it Yeah, I thought you were asking for the audience I Knew you knew it but I just I think I was going I was going to teacher mode
Which is what I did. My guest was a little late on Right as the Fed announcement was coming out So I was able to get a couple of VIX trades off in the five minutes that I had to spare But yeah, it's look at I was out of your UVIX trade the best weekend ever because I was traveling that weekend as well So sometimes the travel comes home to roost speaking of UVIX 430 down two tenths of a point from where it was this time
Last week 16,000 on the tape today. The adb is 35,000 doesn't seem like we're getting there today But you never know the end of the day could be crazy. Mr. Mr. Rose. You mentioned your spooked You mentioned you're kind of unwinding some stuff. There is some Potential for some action over this weekend things starting to light up again the Middle East a few other hot spots Maybe flaring up. Are you are you rocking the old UVIX weekend trade again this weekend?
Absolutely Absolutely It's always kind of an interesting weekend that I I Every Friday I could probably come up with some sort of You know hypothetical that that's gonna help us out They they're not friendly hypotheticals and people might start to investigate me or have me locked up or something. But You know When the Middle East is by far always one of them those guys are gonna keep going tit for tat
I'm just glad that I had just given up my beeper like three weeks ago. I was gonna say pager bombers What are we doing? Are we striking back at 1980? But yeah pager bomb who had that on their bingo card for this week I certainly did not you would think that that is in front of something big That's the kind of thing that you would do if you were getting ready to make a big move. So in that is possible
Munching advance they had to bomb them at the factory before they got shipped over. That was a long time in the works You're right. There perhaps our other shoes yet to drop All right. My dad said years ago once he said you just don't mess with Israel Well, we'll see. Yeah pager bombers that shows a wee bit of patience. Is this your weekend to put on the UVIX trade listeners? I don't know. Have you have you flirted at all with this Russell's weekly or we should say weekend UVIX trade, sir
What do you know it's not it it fits with my strategy. I'm thinking about playing with it You know now that UVIX is down to four dollars and thirty cents, you know Maybe I will buy a hundred shares over the weekend just for giggles 100 lot. Look at you. We were slinging
I know I'm gonna go crazy guys and we got we got run over. So maybe a hundred lots of the way to go I'm looking right now at UVIX at the top-sized positions and UVIX right now Listen is the big dog almost eleven thousand of the oc5 calls so I had to go dig at this because those those kind of leaped off the page and I don't remember seeing that many before and Yeah, they started loading up on these back on August 13th So they paid a pretty penny for these when the UVIX was around 588
They paid two dollars and nineteen cents for these five calls in UVIX Wow Wow, that's a lot to pay for calls And they're still open listeners and you fix is that a 430 so go go mixes
You vix mark you vix is losing about three cents a day. So if I think vol's gonna hold up you could sell the the UVIX four dollar put for next Friday at ten cents and by the five dollar put call for 15 and that would be kind of an alternative way of buying your Your your play if we get like a real pop doing Russell's way just spitballing here Yeah, I have been I have been toying around with
Alternative ways to do it using the options. You're right. It is a little challenging Just ask this person who spent to 25 calls on that one's working out But yeah, I don't hate that nickel outlay and you're right Then you're in you're definitely defended against the last minute one thing I won't be doing is if I do play with it again
I know Russell you like buying it a couple of hours before the close. That's too much UVIX Delta risk for me I've seen it whipsaw too many times I have a point and that even when it's down around the four dollar range So I like you know buy it on clothes sell on the open just literally just only going for the weekend risk
But you like playing a little closer to the fire. You like buying it a couple hours at a time, right, sir Honestly, it depends on what I'm doing this afternoon So sometimes sometimes I'll buy it shortly after the program Just to make sure I don't miss it heaven forbid if I had missed it that weekend that that it almost doubled I would have been you know what if I had done that I probably wouldn't have admitted it to you guys Hey, I admitted it I was traveling
You could have it's a fun eye. Yeah, I I Wanted I did forget it one time Thank goodness not that weekend So if I feel like I'm gonna get distracted in the afternoon I'll usually buy it shortly after you and I are done chatting that that's good. That's kind of been my theme So they go. Yeah, there you go listeners. Let us know if you're playing around this one Have you found a way to go about it that that you're comfortable with a UV XY?
2384 when we kicked off the show 31,000 contracts on the tape That doesn't seem like much for you BX why let me rerack it right now
See if they put up a little bit more paper since we've been talking and yeah, they're hotter now. I actually had about a 80,000 contracts now looks like that was some old thought that sounded wrong old data there 80,000 contract which is only a thousand off of their 80,000, excuse me, which is down about 2,000 So UV XY amongst all the vol products we're talking about Managing to maintain its ad be pretty much so the UV XY Defense Force can be
Excited on that one the big dog positions look like they're all well There's one pre-split adjusted 10,000 almost 11,000 of these sep 25's so I Wonder if it's the same guy is about the same paper as UVic same size almost exactly That would be strange if he bought that set 25 and and the UVic's
That's the case. He probably sold the set so and you mix or you guys why so that could be a decent trade out there And then VXX just to round us out of the vol ETPs this week VXX was hanging out at about a 48 right before Showtime a 4730 right now which puts it down about 7/10 of a point out there on the week in terms of Paper it wasn't lighting the world on fire looking a little bit better now 31,000 contracts on the tape that compares to an ad v of 33,000 which is down about
2,000 as well looking for a size paper out here We got the same deal a lot of pre-split adjusted nonsense out here. Mr. Meatball I know you said you've been a little bit more intrigued by VXX Certainly would have had its dance back up to nearly 60 recently anything catching your eye in VXX or UV XY this week sir Yeah, you know Well, I told you my UV XY trade from earlier. Yes. Yes. Yeah, I'm I'm dabbling in some VXX here I think it's worth a look at a potential short here
Oh, you're back to which puts are you eyeballing here and VXX Lynn? I'm you know, I'm looking in November I think post election if you look at what vol does after elections happen even in 2020 the VIX absolutely dove so November looks kind of tasty to me So somebody playing in Dease a few weeks ago and they dramatically overpaid for those puts So sometimes if you go too far out listeners and you pay I have to evolve premium of those puts
I think they're still wearing it on those puts but intriguing stuff. Mr. Mr. Mr
Rhodes anything catching your eye in UV XY or VXX. I know your favorite VXX early, you know, like like said I'm doing you VI X I You know continuing to do the trade that I talk about doing I look at I just I really wish I could get a bit more juice for out of the money calls when I do this and I even experimented around with Selling a slightly in the money call that had some time value to it to see if I could trade out of it better than the the Monday open and
That didn't work worth a damn. I tried that a couple of weeks ago That became almost like a stuck trade. Like what the hell do I do with it now? And I ended up just holding it through the whole week and then exiting at the following Monday So I have been I continue to try to figure out If I can improve on this thing and I can't I haven't figured it out yet But nothing can improve upon the crystal ball listeners. So let's head into that we not right now It's time to peer into the future
And reveal what the volatility gods hold in store. It's time to look into the crystal ball All right listeners I was joking at the top of the show it's asking if anybody out there had 15 handled because I know I did I was at a 1576 and right as we kicked it right as the music hit right before the segment started 1586 in Bixlan, which puts us exactly within a tenth of a point exactly within the margin of victory. That's good I need a little bit of a bullseye. I'm sure if I reracked it right now
We'd we'd be moving again. So sometimes you gotta you gotta catch the bullets right at the right time
Andrew I was on the show last week. He was out of 1499 didn't quite get to a 14 handle But you know what the day is still young it could still happen and mr Rhodes was feeling his oats to the upside at 1666 So I get a winner winner chicken dinner, which which feels good being on the road getting a little bit of bullseye action So tell you what I'll let you let you chew both a mole and I shall go first this week listeners 1576 is where it was this week and you know what?
We had the big catalyst obvious. That's what made this week. So challenging Well next week not obviously not as big of a catalyst on the board So I think we could maybe look for maybe a little more unless of course we get this weekend fun popping off Like we were talking about earlier. I'm gonna hmm. I might say it. I might say 14 I'm gonna say 1485 for this time next week. So yes a 14 handle I have breathed it into
Fertion listeners. Let's see what everybody else has in store. The next closest was Andrew so actually yeah, actually, you know actually would have been Russell a little bit to the upside. Let's go to Russell then mr Rhodes, what do you have in store for us next week, sir?
Sweet, huh? I'm sorry. You got cut off at the end. What would you say? I said not a whole lot going on next week potential news wise Yeah 1499 oh Look at you coming right in coming right in I had above me giving me a little bit of breathing room
But no where I'm sorry. Where are we? I thought I thought you'd said 15 something. I said 1485 you can have your 1499 No, no, no, no, no, no, no, no. I'll do 1515 just to screw with Mark Sebastian because I'll bet that's what he was thinking I might do that or he might do for 1441 in which case I got 1515 is not palindromic
I'm giving you 1551 is what I'm doing. I well, yeah, no, I'm just debating well at this point I'm gonna go with 1661 so that I've got some room Oh, let's you go into the upside getting all that upside all that prices white right upside action to yourself All right listeners. You got quite the range. You got Russell giving me the smooches down there at 1495
I'm at 1485 and then mr. Mr. Meatball at a palindromically appropriate 1661 all right, that is gonna do it for us on valve use this week I hope you enjoyed the slew of content coming to you from the Southern studio here at STA more to come Hitting the pro side first options oddities already up there as we speak right now an early episode of optimal oddities this week You know this travel the conference is always wreak havoc with the production schedule
But we know what we do it for you folks out there listeners So stay tuned to the pro you'll be hearing a lot of my chats first up there They'll be hitting the rest of the network another good reason to be subscribed to the full network We love everybody listens to ball views we get it But you got to listen to the full network especially with the new shows hitting futures rundown coming on already at episode three three years old already
Big number three so make sure you listen into the full network wherever you get this and of course head on over to the pro If you want access to all that other good stuff the options insider comm slash pro and mr. Meatball Where should they go if they want to talk s Vicks or Vicks or any of the other fun stuff?
Yeah, just follow me on Twitter at option We'll get it out there for you folks There you go at option pit check out some of his archive webinars if you miss miss the live stuff and Yeah, maybe they want to hit you up about that funky reverse calendar and Vicks That's certainly an intriguing one not for the timid certainly not for the faint of heart But if you can handle being a long in the front and short in the back Then maybe maybe that's the trade for you
Option pit comm the place to go to learn more at option pit on Twitter and mr
Road sir as you're busy recovering from head trauma sir. Where should folks go if they want to they want to check out your goodness Find me on the Twitter and my full name Russell at Russell Rhodes Not really anything dramatic coming up I think I got a webcast in early October Where I'm gonna take a look where I'm gonna talk about how the How the short dated index options have been acting in both in the europe in Europe in the US they have They have been under pricing for months now
So option sellers have been getting absolutely creamed not just in Vicks but also in the in The euro stocks 50 and the DACs and the S&P 500 the NASDAQ and the Russell So I think the big next big thing I'm gonna be doing out there is talking about results in those markets There you go at Russell Rhodes 2 s's 2 l's are H. O a DS on the Twitter to find him listeners That's gonna do it for us out of these already up
So if you want to check that out go hit the pro feed take the rest of the weekend off go relax unless you're rocking Russell's you big straight in which you got a swept by your keyboard a little bit then we'll see you back here on Monday for The option block I'll be back in the shy town studio by then all the way through to next Friday another episode volatility views Stay safe out there everybody
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