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Brian Stutland, contributor to CNBC's Options Action shown on Fridays, talks about his play on the next possible take over target: US steel. Specifically, Brian recommends to buy the Sep 45/55 call spread for $3.25.
Last week the Federal Open Market Committee surprised no one
when they raised rates 0.25 basis points to increase rates to between 1% and
1.25%. What did surprise the market, was the revelation that the FED is
committed to normalize rates, even if inflation does not meet their
target. This was reiterated this week in a speech by William Dudley,
President of the Federal Reserve Bank of New York, who stated he feels the FED
needs to raise rates, despite low inflation, to be ready to act if the economy
does slow down.
The market has been quick to respond, and nothing was hit
harder by a reduction in inflation expectations than commodities. Gold, since the announcement, is lower by 2.39%, and oil is down -3.18%. Crude
futures have broken their upward trend line and appear poised to test the
previous low of $39.56.
While, oil has been under pressure all year, the S&P 500
does not seem to care, as it continues to make all-time highs. Oil is
down 23% year to date, while the S&P…
Today we are seeing a modest rebound in the market after yesterday’s small selloff. Volatility remains extremely low, with the VIX hovering around 10. It’s important for traders to recognize how low the VIX has been lately. Since 2010, the VIX has only closed below 10 five times, and each of those five times has come in the last month.
However, the market is not without risks right now. Gold has rallied 6.5% since May 9th. Treasuries have rallied, pushing rates to below 2.15. So, the market is currently in a risk off mode while equities are in a period of historically low risk. The VVIX (the VIX of the VIX), for its part, is not sounding the all clear signal, 87 is in the medium range for VIX volatility. Tomorrow we have a potential market moving event with James Comey’s testimony to Congress. The last time Comey’s name was in the news, we saw the VIX move from 10.5 to over 15 in one trading day (a 50% increase) on a day where the market was down over 2%.
Markets around the world pulled back the reigns as central banks look to taper quantitative easing. Japan’s central bank decided to leave their current pace of monetary policy unchecked, which has effectively cut the Nikkei down 1.5% on the day, affecting nearly every market in-between, scaring the DJIA 165 points off the start this morning. US Treasuries have now notched the highest yield in 14 months on the 10 year note.
This morning 55,257 EEM July 35 puts were purchased by a trader for $0.29 each, costing him a large $1,602,453. This is a bearish move on the Emerging Markets ETF, with expectations that by the July expiration, the price of EEM will dip below $34.71. EEM opened today at $39.32 and if this trader was to pass the breakeven point, the ETF would have to drop by more than 11.7% within a little over a month.
EEM opened today 1.9% lower than its closing price yesterday and since the 52-week high the ETF experienced in early January, it has lowered by over 13%. While this …