Friday, September 30, 2016

Aqumin Volatility Newsletter 9-30-16 $XOM, $DB

Who cares about DB when we have XOM?

DB stole the headlines this week with what might have been a Lehman moment.  As this blog was written there are rumors of a reduced settlement or at least the availability of credit for DB.  The short gasp of volatility we had on Thursday looks like just that, a short gasp.  The volatility is still with us in Energy.

In what used to be a relatively unexciting part of the market, Energy stocks are ripping up with every OPEC headline.  Currently for the S&P 500 (AlphaVision Landscape below) they are most volatile (red and tall) groups for both the short (10d) and longer (60d) terms.  The oil price swings and the near death experience for the group is still very close.  This movement is also generating better than average premiums in the options.

A stock like XOM which just traded $83 is generating 2% to write the Oct ATM call.  That is not too bad on less than 1 month hold.  With some kind of deal in with OPEC, stable oil prices should make the Energy group a nice premium write given the current higher volatilities.

Read more from Andrew at Option Pit

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