Woe is stocks II

Monday 29 August 2022

The Market Ear with more equities positioning chartfest.

———————————————————————————————————–

So how extreme was the VIX move on Friday? Not overly extreme. We are seeing a follow through today, but note part of it is the Monday “effect”. Regular readers of TME are familiar with our latest bearish logic and long volatility/hedge reasoning outlined on August 16, the highest recent close, in our post “Are we there yet? Yeah….”.

Our bearish trade logic has played out very well (Aug 16 as well). Recalling what we wrote: “The Sep SPY 420/400 put spread offers around 5X the money where you place the lower strike right a the big 4k level. If you want to play it outright bearish, just load up on puts.”. You should be active about the next phase of the “dynamic hedging” depending on your view post the crash. Still scared about more downside: why not book some juice profits and roll into lower strikes…When trading options you must “force” yourself into dynamically adjusting your strikes in order to max out the options “juice”.

Tier1Alpha

SPX – 4000 is HUGE

Spotgamma explains: “400/4000 is a monster level for the S&P, as shown below. This has been a major level for most of 2022, and should remain so into Sep 16th OPEX. The thing to note above this level is that it holds not only sizeable puts (depicted by negative bars, below) but also calls (positive bars). We think this adds to the support at this level, in the short term, as it may reduce some of the put exposure and related downside hedging flows.”

The full text of this article is available to MacroBusiness subscribers

$1 for your first month, then:

$24.99 / month

$249 / year

Cancel at any time through our billing provider, Stripe

About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.