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WTF VIX Moment Of The Day
Because it's Friday... "unrigged?"
Nothing says "aggressively sell VIX" into the weekend like the start of another war in Iraq...
Chart: Bloomberg
It seems even the VIX momentum-ignition tool can't trump Fed hawkishness concerns... better luck next time Kevin.
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... like the start of another war in Iraq...
Iraq? Scotland!
VIX has reached a permanently low level plateau. It will never tick up ever again. We will never see 40 in our life times. <\1929>
Yeah but we can still wait for the bottom of 6.66 and hope.
I'm holding physical vegetable garden.
It snowed in Calgary this week.
It also snowed in Calgary 20 years ago this week during my wedding. Nothing special about that either.
you mean S@Poor famous 666 ?
yea that will happen like 2 yrs from now
This is not a war. Its a polite action. Sternly worded letters need not apply. Nice. Be nice. Why can't we all just get along?
PS And about Scotland. Many years ago some bright fella Prime Minister thought that "Devolution" was a grand idea. What the fuck outcome did anybody think that would lead to?
BANGDATVIX!!!
Gold down silver down, oil down... scaring the shit out of everyone
+1000
Nothing says "Panic!" like the price of gold going lower.
https://www.youtube.com/watch?v=v1cs2lXXOuU
I admit I am not the smartest person in the room... (or any room for that matter.)
When I see all asset classes going down, that tells me people are turning their assets into cash. When people are turning their assets into cash, that tells me something is up.
September 17th anyone?
Gold and silver are currency. Cash can be devalued and its value cut in a monetary reset.
The next global currency is gold backed. End of story.
US$ paper gold, paper silver, paper oil down
Dollar strength ... as if...
This just might be the big event we've all been waiting for. Physical assets matter as price discovery has been manipulated to the extent that nobody wants to hold anything related to US$ paper.
Er, that'a all anyone wants to own. Cleanest shirt.
Ha, ha.
Good luck "trading" theses "markets"
Asshole fuckers
"Winning," soviet style
Market what's a market...this is a Kabuki Market!
Ya mean 2 fat guys in diapers butting heads?
Does two FA-18 Hornets crashing in the Western Pacific 2600 miles west of Hawaii maybe expalin the VIX ramp? Maybe someone is testing a new electronic weapon, and maybe McDonnel Douglas FA-18 Hornets fall all by themselves?
A change is happening.
Short the ATH now.
Don't BTFD anymore.
im done going long, ive gone 100% short and am calling the double top, enjoy the drop.
Good luck. Shorts not working fo me. Can't fight TPTB.
Janet Yellen paid my FAFSA. I don't care what happens now.
I don't understand how VIX is actually manipulated. Sorry for the newbie question - is it done in a similar way that the programmed trades are done for the S&P?
I don't it is the VIX being manipulated but the manipulation of other "things" that result in volatility changes.
Via the BIS and the President's Working Group on Financial Markets, aka the Plunge Protection Team, buying ES and shorting VIX and other VIX-derivatives like UVXY, to save the day for moar hopium.
That's exactly right. Used to be that six-pack-Joe-volatility-tourist could long stupidity via UVXY.
Central Banks goosing the futures and options markets:
http://www.zerohedge.com/news/2014-08-30/its-settled-central-banks-trade...
Okay so 4-5 other indices are being slammed simultaneously by programs with the intent to drive up this index? It seems so .... futile. So much work for no real gain.
Everything is so correlated via algos and the carry trade, so yes just manipulating one of the big indexes does the trick. It seems to vary from AUDJPY to EURJPY to slam the VIX. Anything gets going with those and other indexes are ignited as well. It's all they have left, to ignore the underlying economy that ultimately will be a referendum on all this paper delusion, and point to SPX and say 'see, see, everything is going great.'
I am able to see the prints and many of these trades are odd lots, even just a single share, sometimes. They can pay ridiculous offers and get a print and trigger stops based on just one measly share, as most don't see the actual prints and whether it was a real trade.
Is there a similar concept in play that causes the S&P to closely mirror the USDJPY for example? It seems totally unnatural for any indice to mirror another. And it looks artificial.
The carry trade is the heart of this whole sham. Borrow in yen and bid up risk assets in the Eurozone and drive down their yields.
Correlation per se is not something to be suspicious of IMO, as that is indeed where efficiency in markets manifests itself (gold and silver move in lock step for a reason, like 95% correlation probably). It's a more globalized economy, too, so less variation based on individual nations.
Kevin pushes his right mouse button and chooses 'drag higher' or 'plunge now' .
A word to the wise. If you do not understand that the vix is being manipulated for derivative and otherwise bullish aesthetics you really should not be trading in these markets.
Enforcer,
The present value of the VIX (which is expressed in terms of a percentage) is calculated from the value of all the out-of-the-money put and call options on S&P 500 stocks set to expire in the month ahead and in the first month after that, with the idea being that by the expiration date the strike price and the options price will have to converge. The difference between those two prices is used to calculate how much the market might be "expected" to move in the next 30-day period.
The upshot here is that there is nothing "real" behind the VIX number in the sense that there is something real behind a normal equity index. The present value of the S&P 500 is the price in dollars it would take to buy one share of every stock listed on the index, i.e the current market price of the stock; but the present value of the VIX is simply calculated from the swings in options prices which in and of themselves tell us nothing.
Therefore, the only way to spike the VIX is for some damn fool to buy a load of options that are way out-of-the-money. The volatility index then responds merely to what this particular goomba thinks is going to happen to stock prices over the next month. He may be wrong; the market might not move as intended and VIX spiker may end up taking a bath on his options bet. However, if the goomba happens to be an activist investor, he might be trying to drive the underlying stock price by playing games in the options market. For instance, by opening up a massive short position, the activist might intend to pound the stock price down by saturating the market with shares. This also would show up as a spike in the VIX.
So perhaps "manipulated" is not exactly the correct word here. A VIX spike is one of three things: it is either an attempt by activist investors to push the markets around (which could be considered manipulation), a seriously foolish gamble in the options market, or evidence of a lack of consensus about what the fair market price really ought to be.
I'm sorry if this answer was redundant.
I really appreciate the detailed answers.
Also thank you Goose for insights into the thought behind why someone would want to push the market around using VIX.
"The present value of the S&P500 is the price in dollars it would take to buy one share of every stock on the index..."
This is incorrect. The value of the SP500 is determined by dividing the adjusted market capitalization of all 500 publicly traded companies by a "divisor" that is determined by Standard and Poor's. While the exact divisor is unknown, it is approx 8.9 billion.
Thanks for that excellent detail on the VIX. I have not done any real objective benchmarks on OI over time, however, there' a belief that those who make an income selling/writing options in the short term have done their DD. I hear it's very safe to sell front month options at the strike that causes most to expire worthless each third friday.
Selling hope (options) is supposedly more profitable than buying it as 90% of OTM options expire worthless.
Thoughts?
I think you're on to something there, and to be perfectly honest I've often wondered about the same thing myself. I doubt whether options work very well as a classical "hedge." The safer bet is to be the one selling the insurance policy, so to speak.
I have a thought for you, it is said or written that the mark of the beast or satan is 666. It almost looks like symbolism for a computer, monitor and keyboard all with a wire coming off them, a digital world.
Don't get me wrong as I know there are a lot of good things coming from computers but there just may be many, many more bad things such as porn, electronic trading/theft, elimination of jobs, etc.
666 mark of the beast, according to John of Patmos, a conspiracy theorist of 2000 years ago, who wrote one of the dozens of apocalypses churned out by the Alex Joneses of that day.
Sep VIX expiration is next week, so this makes all the sense in the world
NOT!!!!!!!!!!!!!!!!!!!!!!!!!
Volatility can only be suppressed so far; just like holding a ball under water, when it snaps and pops there will be hell to pay. Since the markets are so highly correlated due to the Central Banks manipulation and suppresiion of risk, a jump in volatility in any of the markets will have carry over effects in all other markets. A little over a week ago the currency markets started an explosion in volatility, this week the interest rate markets sstarted to follow suit, with some bleed over into equities. Overall, manipulated markets can only last so long, since all derivative bets end up in one direction, at which point the markets reprice risk violently.
I don't know...I think it will push back up atleast one more time... then again I've been seeing 9/24/14 over and over in dreams...I went VXX for about 12 hours made several thousand dollars..now sold everything...just holding cash I think its going to get a bit crazy soon.