Capital Trading Group, LP (“CTG”), an investment firm specializing in execution and account management for commodity trading advisors, has announced the release of its new Managed Futures Podcast hosted by firm principal and alternative investments specialist, Nell Sloane.
McMillan Analysis Corp., dba McMillan Asset Management, is proud to announce the launch of its newest product.
The Volatility Capture CTA strategy is a variation of Volatility Capture that uses VIX futures on a tactical basis to hedge, instead of purchasing VIX options on a continual basis. This pure futures version has a slightly different profit graph and has the potential for better returns in most cases due to the lack of drag from the purchase of VIX options.
The $SPX chart remains bearish. There is support at 2825. There is probably stronger support at 2720-2730, the area of the March and May lows. As for resistance, the major resistance area remains 2940-2950, which is not only the recent tops, but is also the psychological resistance caused by the fact that the July 2019 activity look like a false upside breakout to new all-time highs.
The equity-only put-call ratios remain on sell signals (Figures 2 and 3).
Episode 4- Discussing Options as a Strategic Investment — With Author Larry McMillan
In today’s episode, Nell Sloane of Capital Trading Group speaks with Larry McMillan, author of the bestselling book “Options as a Strategic Investment,” popularly known as the options bible. Larry has appeared on CNBC, Bloomberg, and Wall Street Journal, and he continues to make valuable contributions to the finance industry.
In this episode, you’ll learn:
The mBB indicator is probably at its best when trying to identify when to sell something that is in a parabolic rise (or when to buy something that is in freefall). Typical moving averages are too slow to catch the movements, but the mBB seem to do a good job with $SPX. In the past, we’ve often looked at using the mBB strategy on something other than $SPX, but it never seems to work all that well, although our sample size is small. I recall that we attempted to use it on Apple (AAPL) as a buy signal last year.
The CBOE introduced the Volatility Index ($VIX) in 1993. The calculation of $VIX has changed a couple of times over the years, and due to the complexity of those calculations, $VIX itself cannot be traded. However, in 2004, $VIX futures were listed, and in 2006, $VIX options were listed. $VIX futures are the underlying instrument for all of the Volatility ETN’s and ETF’s that exist today (VXX, for example).
Stocks are still in a negative mode, despite the presence of some very strong rally days emanating from oversold conditions.
The 2940-2950 area represents resistance for several reasons. Meanwhile, there is support at 2825, where $SPX has bottomed on three separate days recently. Below there, the support at 2720-2730 is more identifiable, for that's where $SPX bottomed out in both March and May.
Equity-only put-call ratios continue to rise, thus remaining on sell signals.
The market took a nasty turn downward at the beginning of the week, violating support levels. But that created oversold conditions, and a strong overold rally has followed.
Chart-wise, there is resistance at 2950 and 2980. There is a new support level, at about 2825 (this week's lows), and then below that at 2720-2730, the March and May lows.
In our market commentary for the past few weeks, we have occasionally mentioned the fact that realized volatility (the 20-day historical volatility, say) of $SPX was very low and that a sharp increase in that volatility measure would not be good for stocks. This is somewhat akin to how we view implied volatility ($VIX) in that we are not too concerned when it is low, but do become cautious when it starts to rise. The difference in the two is that realized volatility is backward-looking, while implied volatility is forward-looking. On the surface, one might think that forward-lookingwould be better, except that we don’t know who’s doing the looking. Sometimes, $VIX seems to get distorted, so perhaps there are times when realized volatility could be a better measure.
Everyone was worried about the FOMC announcement this week, but it turned out to be benign. But, on Thursday President Trump tweeted that there would be more Chinese tariffs. Whether the market over-reacted to this tweet or whether there were just a lot of traders looking to lighten up, a torrent of selling was unleashed.
