On Monday, we saw some nice gains in the market. That being said, there are still are a lot of question marks on the horizon. Oil and Gold continue to rise which is sparking some inflationary fears. With these mixed signals, there are a lot of option strategies out there. The good news in this market is the fear level is gone. The bad news is that we may not be ready to keep climbing. With this comfort zone, find out the best option strategies as the panel discuss their views on the past airing of "Options Action".
The CBOE Correlation Index (KCJ) is close to the lowest level we have seen since it was first listed in 2007. The KCJ measures the implied movement of the S&P 500 components options, compared to the implied movement of the S&P 500 index options. Simply put, the higher the number, the more likely all stocks are going to move together. Conversely, a low number will be characterized by sector rotation, and flat markets; one sector moves higher, another moves lower. (Source: Access Hollywood) Correlation, for lack of a better term, is correlated with volatility. Not surprisingly, 30-day S&P 500 historical volatility is near the low level of 6.5%. Currently at 33.5, KCJ is sitting close to rock bottom, lower than where it was in 2007, (but not lower than where Lindsay Lohan was in 2007). So far this year, the market has been able to grind higher, characterized by leadership in FANG(Facebook Apple/Amazon, Netflix, Google) and sector rotation. A...
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