Get started

VIX-SPX

VIX ETPs, The Ticking Time Bomb That Could Unleash VolatilityThese fairly new ETPs, such as UVXY, VXX, SVXY, etc. will likely lead to volatility buying in which we've never seen before. People will be using these ETFs to hedge the risk of a larger stock market correction happening, leading to a continuation of the exponential increase in volume that these products have seen since their inception. This exponential increase in volume will lead to these ETFs holding the majority of VIX short-term futures. When these funds are forced to rebalance blindly to follow their prospectus, it will lead to them placing orders at settlement for a number of VIX contracts that may be higher than the daily volume of contracts traded that day. This will lead to massive slippage in the futures market, causing incredible price swings in both directions. Because these ETPs are forced to buy when price of VIX futures goes up, and sell when the price of VIX futures goes down, to maintain a balanced portfolio of 2x, 1x, or -1x respectively. It will lead to a positive AND negative feedback loop as these funds buy or sell futures based on their NAV readjusting and push the price of futures up or down because of lack of liquidity, which makes their NAV readjust higher or lower, which forces the funds to buy or sell more futures, which pushes the price of futures up or down, which pushes their NAV up or down, which forces the funds to buy or sell more futures etc. Once the liquidity risk of the long volatility ETPs becomes extremely significant, like we have just recently saw with the short volatility products (XIV, SVXY, etc.), then the liquidity in the futures market will not be able to support these products and it will cause massive and insane slippage like we've never seen before. These products did not exist during the last recession, and nobody is really sure how they will act in a real recession like 2008, especially now that their volume is exponentially higher than it was at inception, and could likely continue that trend of increasing for quite sometime, especially if a larger stock market correction occurs, and more investors look to these long volatility products to hedge their risk or make a profit while almost everything else is red. Many are claiming that because some of these ETPs had been shorting volatility on this run up, they had been helping to suppress volatility, which helped to boost the stock market. Now many are quick to blame these products for being the "cause" of the crash this week by increasing volatility. I think that the real truth here is that they did help suppress volatility on the way up, because they sell volatility when volatility goes down, and we've had the lowest volatility in the US since 1964, and as volatility increases, whether it happens now or in the future, these ETPs will help volatility to be unleashed like we've never seen before, because they will buying volatility en masse as volatility increases. These ETPs are not the only cause of volatility, but they will likely be a major factor in helping to create more massive price swings in the VIX than we've ever seen before, which will either unleash or suppress volatility, depending on which way the trend is going. The most important part is that the long volatility ETPs such as UVXY and VXX, could experience an "acceleration event" like XIV did, but because they are long VIX instead of short, like XIV, this could lead to a massive increase in the NAV of these Long VIX ETPs, potentially overnight, as these Long VIX ETPs become larger and the liquidity risk in the VIX futures market becomes far more significant. While it's not quite clear that these ETPs have reached critical mass, they will likely continue to increase in volume very quickly, particularly if this stock market correction becomes larger and more investors look to VIX ETPs as a way to hedge their risk or make a quick profit. This means there is a ticking time bomb in the volatility market waiting to explode.
CBOE:UVXYLong
by Intuit
8
10Y could be the little catalyst that mkts are looking for !!SPX Yields Vs 10Y will let the big dogs shift from stocks to the 10Y for better retunes and much safer/secure investments. Little guys need to watch carefully for this shift if it's even a probable scenario. But when we have such high spikes like today volatility will increase in the mkt and we could see a big final drop in our Y wave of WXY or even further down in a triple zig zag WXYXXZ. Moreover we will meet our H&H + Down channel's targets as well to say the leas. - Stay safe & enjoy your weekend guys.
TVC:US10Y
by samitrading
2
The most important crossing since Covid's low, Golden Cross !!!!What Is the Cboe Volatility Index (VIX)? The Cboe Volatility Index (VIX) is a real-time index that represents the market's expectations for the relative strength of near-term price changes of the S&P 500 index (SPX). Because it is derived from the prices of SPX index options with near-term expiration dates, it generates a 30-day forward projection of volatility. Volatility, or how fast prices change, is often seen as a way to gauge market sentiment, and in particular the degree of fear among market participants. The index is more commonly known by its ticker symbol and is often referred to simply as "the VIX." It was created by the Chicago Board Options Exchange (CBOE) and is maintained by Cboe Global Markets. It is an important index in the world of trading and investment because it provides a quantifiable measure of market risk and investors' sentiments. KEY TAKEAWAYS The Cboe Volatility Index, or VIX, is a real-time market index representing the market's expectations for volatility over the coming 30 days. Investors use the VIX to measure the level of risk, fear, or stress in the market when making investment decisions. Traders can also trade the VIX using a variety of options and exchange-traded products, or use VIX values to price derivatives.
TVC:VIX
by samitrading
Evergrande Impact on SPXHi Guys, since Evergrande warned about the risk of default on August 31st, the SPX slipped into the Kumo accompanied by the following series of events: 0) Aug.31 - Evergrande warns investors about the risk of default; 1) Sept.6 - Trading in Evergrande's bonds is suspended following "abnormal fluctuations"; 2) Sept.8 - The group plans to suspend interst payments due on loans to two banks on Sept.21; 3) Sept.15 - Chinese authoritues told major lenders that Evergrande won't pay interest payments due on Sept.21 on its loans; 4) Sept.16 - Evergrande's onshore unit halted trading in all bonds after a domestic rating cut; 5) Sept.20 - Evergrande missed payments to at least two banks that were due Monday; 6) Sept.22 - Evergrande agrees to pay Thursday's interest on local bonds but offshore creditors remain in limbo. *With reference to point 6) I am more of the opinion that support was provided by the US House of Congress rather than Evergrande agreeing to pay onshore creditors. However these factors can be considered supportive both and the Index appreciated right on the 100SMA. Today SPX is trying to exit the Kumo towards 50SMA or Kijun. FOMC press conference in a few hours. Here a zoom out of the above chart: Thank you for your thoughts and kind regards Cozzamara Disclaimer: Please note that I am not a professional trader and these are my personal ideas only. The information contained in this presentation is solely for educational purposes and does not constitute investment advice. The risk of trading in securities markets can be substantial. You should carefully consider if engaging in such activity is suitable to your own financial situation. Cozzamara is not responsible for any liabilities arising from the result of your market involvement or individual trade activities. Trading in foreign exchange (“Forex”) on margins entails high risk and is not suitable for all investors. Past performance is not an indication of future results. In this case, as well, the high degree of leverage can act both against you and for you. Before you decide to invest in foreign exchange, you should carefully assess your investment objectives, experience, financial possibilities and willingness to take risks. There is a possibility that you will lose your initial investment partially or completely. Therefore, you should not invest any funds that you cannot afford to completely lose in a worst-case scenario. You should also be aware of all the risks associated with foreign exchange trading and contact an independent financial advisor in case of doubt.
OANDA:SPX500USD
by cozzamara