Markets News Stocks 

A 1-day spike in Wall Street’s ‘fear index’ made Goldman $200 million

“The volatility gauge tends to move inversely to equity indexes” writes Mark Decambre for marketwatch.com. Earlier this year, Goldman Sachs booked a roughly $200 million gain in one day, partly on bets that a long-dormant gauge of volatility would surge, ending a protracted period of placidity on Wall Street. Goldman has been less trading focused of late, pouring money into consumer banking and hiring senior executives in its investment-banking and technology divisions. Source: marketwatch.com Share This:

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Markets News 

A striking stat about Wall Street’s ‘fear gauge’ sums up new era of volatility

“The Cboe Volatility Index, considered Wall Street’s “fear gauge” as a measure of swings expected in the market, has roared back this year after many months of muted moves” writes Gabriel Bouys for cnbc.com. The VIX’s average since 1995 is 21, said Dennis Davitt, portfolio manager and partner at Harvest Volatility Management.According to a CNBC analysis, the VIX’s average level this year is 17.11; that’s higher than the average for all of 2015 (16.68), 2016 (15.84) and 2017 (11.10).While that range is just about in line with the index’s long-term…

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Markets News Oil Stocks 

The volatility that rocked stocks was just the beginning — and 2 markets are at the epicenter of impending chaos, SocGen says

“They also advise against shorting S&P 500 volatility risk” writes Akin Oyedele for businessinsider.com. The volatility that rocked global markets in February is set to return this summer, a strategist at Societe Generale says.For traders looking for volatility-based protection, the strategists recommend going long the SGI US Equity Tail Risk Index, which hedges long equity exposure.The risk, however, is that this index could lose a significant portion of its value if volatility stays low.The stock market’s slump that month prompted the largest one-day spike in the Cboe Volatility Index (known…

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Markets News 

Here’s why you shouldn’t blame Washington for recent market volatility

“Since the start of February equity volatility, as measured by the VIX Index, has averaged nearly 21” writes Russ Koesterich for businessinsider.com. As discussed in previous blogs, high yield spreads are one of the best coincident indicators of equity volatility.Since then, high yield spreads have widened by approximately 40 basis points (bps, or 0.40%), the largest jump since last August.All of the above suggests higher volatility, particularly when compared to last year.High yield spreads bottomed in late January, coincident to the peak in equity markets. Source: businessinsider.com Share This:

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Markets News Stocks 

The best stock market trade of 2018 is a total reversal from last year

“In late 2017, the so-called short-volatility strategy, which amounts to a wager on market placidity, was crowned as Business Insider’s stock market trade of the year after surging more than 200%” writes Joe Ciolli for businessinsider.com. So the next time you’re at a loss for what stock market trade to make, take a long, hard look at the volatility complex.When the stock market gives you lemons, make long-volatility bets.And all three have returned far more than even the best-performing stocks in the benchmark S&P 500 this year. Source: businessinsider.com Share This:

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Futures Markets News Stocks 

JP Morgan: Sell Cboe stock because trading in volatility on the exchange is losing popularity

“The data continues to support the utility of SPX and VIX options and VIX futures in varying market conditions.”” writes unknown author for cnbc.com. A slowdown in VIX futures trading will weigh on shares of Cboe Global Markets, J.P. Morgan warned clients Wednesday as it downgraded shares of the international exchange operator.”We see continued risk of a further slowdown in VIX Futures activity and see the potential for VIX options trading activity to slow as well as short volatility activity falling from more elevated levels,” analyst Kenneth Worthington wrote to…

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