That Was The Week Ending 26th January

Here’s What the Week Looked Like To Us.

A Drop! More Than 1%!

Well, it fizzled out and volatility had a tiny blip which did nought for options prices. This kind of move makes traders believe it might be the start of a bigger slide. We just see forlorn looking options prices-though selling certain options at 7730 -ish was a nice trade. (No details here). The move seems to have been predicated on £ (GBP) moving higher against the US$. Who can say for sure? And if so, why did it move back up 0.65%? It’s just the market reacting to news.

What Is In Store?

This week sees President Trump giving the State of the Union Address. I doubt this will be a downbeat affair- given the lack of shrinking violets in the White House. All the boasts will of course be hollow victories as it takes 9-12 months for any change in government policy or action to filter through to the economy. This is Obama’s legacy, not Trump’s victory. This statement may be fake, of course! We’ll be enjoying Covfefe from Nambia during proceedings.

The Eternal Bull

The excellent Saxo Bank entertained us this week with a superb address from their self effacing economist Steen Jakobsen. The following was noteworthy, for our tiny site:

Bonds may be seeing end of month rotation buying, with stocks selling off a little as yields dictate.

Stock traders are citing the low VIX as the reason to buy stocks ( yes-seriously the tail is wagging the dog, and its owner!)

2018 may see as much as a 20% rise in markets, with possible issues occurring in Q3-Q4. So don’t expect a big rise in VIX any time soon. ( I would counter this by reports of the legendary, possibly mythical 50cent trader buying VIX March calls)

Caveat

Credit spreads may no longer be the smart trade.

 

Filed Under: FeaturedInformativeStrategies

About the Author: First found out about options in 1995.From the arcane magazine Exchange and Mart! First trade- a covered call on VOD in 1999. Made 10%,VOD almost doubled. That's when I realised I was not a good trader,and I was forgiven thanks to the amazing world of exchange traded options

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