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Turbulence

January 20th, 2010 at 08:31 pm

Stock market talk.

"Ladies and gentlemen. Please fasten your seat belts and observe the no-smoking sign. We're about to experience some turbulence."

I read earlier that today's call options on the VIX is more than twice as much as puts. In other words, the majority of the market strongly believes that volatility is going up, which one may also imply the market cap (such as Dow) is expected to go down in the near future.

Well, that's not good. Big Grin

Speculatively, it's a great time for people who are planning to buy in to WAIT maybe another few weeks and see if the market doesn't become cheaper before you do buy in.

And for those who are already in (or passive investors), you might as well stay in. This may turn out to be something, or it may turn out to be nothing.

Oh, and I didn't realize you can buy options on the VIX! Gee, you could literally trade just about anything these days, can'tcha?

Posted in | 4 Comments »

4 Responses to “Turbulence”

  1. creditcardfree Says:
    January 20th, 2010 at 08:33 pm 1264019612
    1264019612

    I'm hoping I can schedule our roth conversions to take place during a down turn! Less money to tax.

  2. Broken Arrow Says:
    January 20th, 2010 at 08:35 pm 1264019744
    1264019744

    Right, that's basically why I posted this. If you're already a market timer of sorts, and if the options tea leaf readings are correct, then it's best to wait another month or so to see if there's a dip to buy-in (although I realize you said conversion).

    Even if this becomes a bit of a non-event, then you haven't really lost anything.

    But if this is completely wrong and you miss out on a massive upshot, um... SORRY. Big Grin

  3. kv968 Says:
    January 20th, 2010 at 09:38 pm 1264023488
    1264023488

    "Oh, and I didn't realize you can buy options on the VIX! Gee, you could literally trade just about anything these days, can'tcha?"

    Derivatives my friend...derivatives. Not much you can't trade on these days Smile

  4. baselle Says:
    January 21st, 2010 at 05:08 am 1264050535
    1264050535

    Good to know. I've been waiting for the market to puke its gains a bit. I'm looking forward, no, I've been positively itching to buy stuff.

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