80% of US companies with better-than-expected results

About 80 percent of the S&P 500 companies reported better-than-expected results for the first quarter of the year. Still, the index has fallen by 1.2 percent for the year to March, after investors are increasingly beginning to fear an upcoming recession for the US economy.
Volatility index VIX rose to 37 points, momentarily in February, after the sharp decline in the indexes in the second month of the year.
And although the broad US index has seen an increase or a decline of more than 1% only eight times in the past year, in 2018, movements over that figure were already registered for 35 days.
This poses the question to investors whether the 2019th year will end the second longest bullish market.
The US economy posted an increase of 2.2% in the first three months of this year, with inflation at the current US level.

Time to buy VIX? (2)

Why is VIX perfect?

Because the index is traditionally moving in the opposite direction of the US indices. But, unlike them, its downward potential is limited to about 10, or just below that limit - about 20 percent of its current levels.
Unlike six months ago, however, when US indices suffered from total lack of volatility and traded only at new and new record values, the unthinkable happened and volatility erupted, bringing this index to levels over 30 for a moment.
After a long recovery of indices, the indicator returned again to its lowest values. But the danger of a new eruption is much greater than half a year ago.
Or, the index can easily and quickly double, and why not, even tripling its value, with limited potential for decline. Or a yield-risk ratio of 5 - 20% drop, versus 100% growth.

Time to buy VIX? (1)

What's happening on US stock markets can be described as extremely dynamic and dramatic. But, as they say, we've already seen something like that before. Two times. And just before a drastic drop in US indices by more than 40 percent. Yes, I recall 2000 and 2007.
And while it does not necessarily have to end the same way - with crisis and crash (although it is possible, given that it has already passed 10 years since the last crisis), at least we can enter the "bearish cycle" - that is, a decrease in indices of more than 20%.


How?

The scenarios of the events in above mentioned two years, and then witnessing a fall in the index of more than 40%, seemed this way:
Reporting a historical record => Correction between 8 and 13% for about four weeks => Upward test for the next three or four months => Unsuccessful breakthrough or minimal false break at the top => Direction down to test the lowest value of the correction => And finally break down when breakthrough at the stated lowest value. Does it seem familiar to you?
If you think that a similar scenario can be formed at the moment, you can trade it with the VIX.
And the moment of his purchase is "ripening" again. Because the volatility index is again starting to look like an "asymmetric investment" - one with a limited drop potential and unlimited growth.

Dive for US indices

The record start of the year for the US indices could not last forever. And that was known by all market players. So, yesterday's stock sellouts should not be surprising to investors.
The Dow index lost 360 points, or 1.4% to 26 076.89 points, and the broad S&P 500 declined 1.1 percent to 2 822.43 points. This was the biggest drop for broad index since August last year.
Serious sales also has the technological Nasdaq, falling 0.9% to 7 402.48 points.
The big winner in this case was the volatility index, which is already over 40% above its lowest levels last month.
What were the reasons for yesterday's correction, in a state of good performance from US companies? Many and various. From the general belief that the growth since the beginning of the year has been excessive and too fast to the expectations of an aggressive policy by the Fed and the change of leadership of the reserve, which traditionally leads to shocks, at least historically.

A mysterious trader continues to bet for volatility

The mysterious trader, who has become famous for his big bets on volatility, continues to get into the media. The final bet for a volatility would have brought him $260 million.
The US indices, which are at record levels in their history, have initiated a record low volatility. Indeed, the leading US indices have a record long period of no adjustment of 3% or more.
Exactly two months, following a vicious bet on VIX that the volatility index would rise to December, expectations were continued until January.
Or the position was the rolled-over for the first month of the year, with a potential for profits of the fascinating $260 million.
In the preferred scenario in which the VIX index rises but remains below 25 points before December, the trader would initiate a profit of $260 million.
If the index rises above $35, however, the trader will start losing money. The spot of the volatility index was trading momentarily at 13.57 on Friday.
Information about the trade was revealed before the Bloomberg financial magazine by a trader familiar with the deal.
Market observers comment that the bet is probably not speculative, but aims to insure a large institutional investor's portfolio from potential volatility in the markets.

S&P 500 on its way to a record-breaking series without a 3% daily loss

The volatility of the US markets is on a record low, and that's already old news. Perhaps you will ask, however, how calm the US markets are.
The answer is: very...
The S&P 500 index has not registered a decline of at least 3% since November 7, 2016. This is 234 trading sessions and the second longest similar period, with no drop of 3% from 241 days from January 26, 1995 to January 9, 1996, according to data from Pension Partners.
Only eight more trading sessions without a decrease of 3% or more during the day and we will have a new record period.
The strange lack of volatility is in the midst of new record values ​​for US indices. On Thursday, however, they interrupted their record of new records, which may be the first more serious alarm signal.
US indices are on their way to their ninth consecutive year of growth, which would equalize the record growth for the period from 1991 to 1999.
Moreover, the S&P 500 rose by 14% since the beginning of the year, while the Dow added 16%. Technological Nasdaq rose the most: by 23% this year.
Meanwhile, the Volatility Index VIX is trading at a record low for the past 23 years.

22,000 points for Dow, traders are betting for a serious shock on the markets

 Dow Jones hit 22 000 and currently is sliding around that key level. The story is the same - new tops for US indices, or minor changes without the absence of more serious movements in either direction. This makes the market extremely calm and seemingly "sure".
Not in that opinion, however, are the traders. They are betting for a shocking event, at least when judged by trade in the volatility index. Traditionally, the VIX index is rising at moments of market shocks.
And bets on such events are the highest for nearly two years. This is in the middle of near-record low values ​​of the volatility index.
Investors turn to the historical performance of US indices and widely accept the idea of ​​an event that will shake the market.
In addition, they rely on the two  historically worst months - August and September - to repeat again and surprise investors. Especially in the absence of a more serious adjustment over the past few years.

"50 Cent" again with a mass market bet for market volatility

The trader, nicknamed 50 Cent, again made a serious market volatility bet in the next two months.
He has spent $3.8 million to hedge against potential sales on the market.
The stake is, of course, the volatility index VIX, with options based on it.
This time, the deal includes 74,300 call options of VIX with a strike of 21 and with a pay date in August, with the options being bought at a price of 51 cents.
The stake is very similar to that earlier this month month when 75,000 call options were bought, with a strike of $18 and a pay date in July.
It is already clear where the trader's nickname comes from - namely, by traditionally buying call options based on VIX, with a price of about 50 cents each.
The trader has gained popularity in recent months, in an environment where the volatility index is traded at a record low.
Market observers comment that the trader's new bet is largely related to the expiration of the June options that were part of his portfolio.

The mysterious trader "50 cent" made $27 million profit for a day from VIX (2)

The broad S&P 500, on Wednesday, noted its biggest daily decline since September 9, largely due to political uncertainty.
Despite the big profit on Wednesday, "50 cent" is still far from profits, overall, given the fact that his bets on increasing volatility in recent months have not been justified and have brought him substantial losses.
Experts estimate, after the profit of 27 million dollars on Wednesday, the trader still has about 90 million loss.
Recently, The Financial Times identified the trader as the London-based investment manager Ruffer LLP, referring to unnamed bankers.

The mysterious trader "50 cent" made $27 million profit for a day from VIX (1)

The mysterious US trader with options - nicknamed "50 cent" - has earned strong earnings after the sharp rise in volatility on Wednesday, according to the financial institution Macro Risk Advisors.
The trader, at least on paper, has earned $27 million, according to Pravit Chintawangvich, head of the option trading unit at the institution.
The VIX Index is one of the most widely watched indicators and a barometer of expected market volatility in the short term. On Wednesday, the index ended with an increase of 4.94 points, or its biggest daily increase since September.
The strong rise in the indicator has gravely favored the mysterious "50 cent" trader, who has periodically bought call-based options worth about 50 cents.
Index-based call options are pledged to raise the asset that is tied to a market sale.

What to buy when S&P 500 is correcting? (1)

Did the US indexes started correcting? This is the issue that tortures all investors, after a long-awaited decline in the US market on Wednesday. What is certain is that times of record low volatility may have ended.
The VIX, or the volatility index, is the first suspect to get into the eyes of any investor who wants to insure themselves from a further fall in the indices.
The fear index reached a 23-year minimum in the past week and yesterday saw a significant depreciation of its lowest values. However, as history shows, this may only be the beginning of the indicator's appreciation. It is quite possible to witness a test at the highest levels of the indicator of more than 16 points.
What else can be traded by investors fearing a further fall in the indices. A completely logical answer is - companies with a negative relationship with the market, or with a negative beta.