The CBOE has launched what may prove to be a very useful product – short-term $VIX futures ($VXST). The feature article discusses their terms and their potential usage. Also, there are comparative charts with $VIX and $VXST. If volume is decent, this should be an excellent product.
A lot has happened in the past three weeks, but $SPX is literally unchanged from where it was at that time. A nearly 100-point round trip has taken place -- down, then up.
A move above 1850, to new highs, would be very bullish for $SPX. Although if it happens right away, it will be without support from many of our indicators. Meanwhile, there is minor support at 1800, and major support at 1740 (the February lows).
Equity-only put-call ratios continue to remain on sell signals.
At face value, it certainly seems as if this new volatility product, the CBOE Short-Term Volatility Index (symbol: $VXST) will be useful and successful. In this article, we are going to look at all of the details (at least as far as they have been disclosed by the CBOE), as well as make some projections about how these new products might trade. These projections will be based partly on theoretical historic data, as well as what we know about how $VIX futures and options trade.
For the Introduction, an explanation of Expected Value, and Expected Value and Option Strategies, and Determining the Probabilities refer to Enhancing Option Portfolio Returns Using Probability and Statistics - Part 1,
The stock market finally halted its straight-down tailspin. A strong rally generated some oversold buy signals which could carry the market back towards its declining 20-day moving average.
The $SPX chart is negative, in a pattern of lower highs and lower lows, and that is what makes it bearish.
Equity-only put-call ratios remains negative. Thursday's rally did not impede their march upward, and when put-call ratios are rising, that is bearish for stocks.
Stan Freifeld, Director of Corporate Services and head of our Option Mentoring program, was recently interviewed by editor Jayanthi Gopalakrishnan for the February 2014 issue of Technical Analysis of Stocks & Commodities Magazine.
You may not be aware, but Stan Freifeld of the McMillan Mentoring Program also directs our consulting services. It allows those who have questions regarding their options trading to have a professional trader provide insight, analysis and solutions to many trading situations.
Are you having fun yet? Volatility has returned, and the market is a daily dose of pain and pleasure, to either the bulls or the bears. There are plenty of cross-currents now, and in reality, volatility hasn't even increased all that much (statistically).
We are excited to announce the release of Option Workbench 3.0 on February 15th, 2014. I will be giving live demonstrations at the New York Trader's Expo in the McMillan Analysis booth (#5409) in the exhibit hall located on the 5th floor from February 16th through February 18th.