Quick VIX

Brian Stutland was featured on the closing bell to the discuss the implied volatility of the market. He was asked to comment on why the VIX was trading at higher levels despite the market moving higher. Typically, the VIX trades lower as people sell covered calls to take profit on long underlying positions and as we tend to see the market consolidate, taking a breadth, on each move higher. However, there is some belief that the market will have a big move following the Fed's rate decision this week and thus people want to own volatility, thus bidding up the VIX index level, regardless of the direction of the market move this week. What will the Fed do and how will this effect the market? Currently, there is over a 90% chance they cut rates 25 basis points based on the fed funds rate futures.

Bloomberg invited me on once again to get a traders perspective in options trading. I discussed how the S & P 500 is going to 1600 while the Dow is headed to 15000. Downside puts in the S & P 500 are still at a relatively high price level due to concern in the financial sector of the S & P 500. Technology looks to be in a great position going foreword with a weaker dollar. What is your opinion about the S&P 500 by year end?

On Wednesday October 3rd , I made an appearance on Bloomberg T.V. to talk about the CBOE Volatility index(VIX). I noted that the VIX November futures are trading above fair value, meaning sentiment is predicting an increase in volatility. Investors are uncertain whether the FOMC will change rates. Another pressing issue on the minds of investors is how the fall in housing prices will affect holiday retail sales. Less cash liquidity, combined with falling housing prices will typically result in higher volatility in the market.

New Options Join Successful VIX Options, Expanding CBOE's Suite Of Volatility Products CHICAGO, September 26, 2007 - The Chicago Board Options Exchange (CBOE) will begin trading options on the CBOE Nasdaq-100 Volatility Index (ticker symbol VXN) and the CBOE Russell 2000 Volatility Index (ticker symbol RVX) tomorrow, Thursday, September 27, 2007, under licensing agreements with The Nasdaq Stock Market, Inc. and The Russell Investment Group. These two new contracts expand the suite of volatility products offered exclusively at CBOE and the CBOE Futures Exchange (CFE). CBOE will now offer options on three of CBOE's volatility benchmarks, as VXN and RVX options will join the popular CBOE Volatility Index (VIX) options. Since their launch in February 2006, VIX options have already traded over twenty million contracts, making VIX options the most successful new product launch in CBOE history.