Thursday, December 18, 2014

Aqumin Volatility Newsletter 12/17/2014 $XHB

Happy Housing

The stock market got a gift from the FOMC minutes release today by leaving the status quo largely unchanged.  I guess there is enough jazz in the mix with oil prices, Russian solvency and high yield debt for the Fed to chew on for a while.  There has been plenty of volatility to go around with VIX trading just over 23 today on a  run down to the 19s.

On my OptionVision realized volatility landscape, I have rearranged things so the most volatile names on average are in the front of the 3D vol map.  The surprise is the Homebuilders are showing the most volatility over the last 10 days relative to the last 20.  You would think Energy and Oil, but those names have already been volatile so relatively speaking they were just moving like they were in the slide.

12-17-2014 4-30-01 PM

I read this as homebuilders got caught up in the recent market vol. and got tossed a bit more than others on average because they were so stable earlier.  Now that the rate picture is clear these should do ok.  I think a long OTM call time spread in XHB (Home Builders ETF) would work ok, or selling some OTM puts spread in a farther term cycle.  Maybe both together if you are feeling frisky.  Cheaper gas means it will be cheaper to build houses too, just saying. 

OptionVision™ – data from ORATS

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