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Wednesday, January 16, 2019

OVERPAYING FOR VOLATILITY

“So says Volatility!”  

We opened last night with sky high premiums in GBPJPY … this after both 
longs & shorts got the “tree shaken” and forced out after the “Brexit” vote 
… today sees more political maneuvering with a government “no confidence” 
vote scheduled within about a half hour from expiration … margin of error 
for PM May is 13 votes … if she loses she’s gone, but consensus is she survives 
along party lines [Tory & DUP from Ireland] … and so, pricing for volatility 
while the clown show continues, didn’t seem like a very good idea last night, 
notwithstanding the blowout “shitshow circus” the last 2 hours of the New 
York trading day.

To make matters worse, even though volatility has collapsed here recently in 
stock indices & crude oil, they’re still priced for action when none is present 
and accounted for by any stretch … these are also awfully overpriced versus 
their respective 20 Day Range MA’s, which non coincidentally are coming 
down … so, there isn’t a lot out there right now that makes sense.

Which brings me right back to GBPJPY, where the equal “floor & ceiling”  
strikes were priced at 90 PIPS … far above the threshold I have written about 
in the tutorial … you buy this, and what you’ve done is place yourself 
HIGHER on the sloping probability normal distribution curve, exactly where 
you don’t want to be, cuz it makes your trade a coin flip … could profit, but 
just as likely NOT to profit … who the hell wants that? … and it places you 
into trading purgatory.

Cuz as today’s trading shows, when the premiums start to melt cuz Europe 
has done Mr. Jack Squat, you need a lot of movement just to get back to break 
even … and if you only get a proportion of that, as soon as the market stops 
moving, premiums go down quickly. Throw into the mix “event risk”, and as 
the event approaches to expiration, you’re faced with the proverbial coin flip 
again … this isn’t a place I want to be.

Really nothing to see here today, as markets across the board are DEAD 
“it’s been a long time since I’ve seen markets go from “ape shit” to “no shit” 
so quickly”. Those who overpaid for volatility today suffered the greatest. 
Onto tomorrow, where rumors galore ought to be floating around after 
today’s U.K. no confidence vote is over. What a frickin’ mess they’ve dug 
themselves into.

I’m outta here … until tomorrow mi amigos … Onward & Upward!!

Have a great day everybody!
 
-vegas

OUR NADEX SIGNALS SERVICE IS UP & RUNNING … DAILY 
WTI CRUDE OIL SIGNALS & “VOLATILITY” STRATEGIES 
IN 20 OTHER MARKETS, INCLUDING COMMODITIES, FX, 
& STOCK INDICES! … “what on earth are you waiting for”?











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