Last Week’s Highlights at IVolLive:
- Register HERE for our next free, live webinar that we will be hosting tomorrow at 12 Noon EST. This webinar is titled Leverage the Real Time Option Spread Scanner to find Profitable Put and Call Option Trades in All Market Conditions.
- It's no secret that the market has been incredibly volatile recently, which can make traders and investors nervous. What's great about the RT Spread Scanner is it's a robot - it will find potentially profitable trade setups regardless of market conditions.
- On Saturday, our experts gave a LIVE walkthrough and demo on the IVolLive platform, including how to trade puts, calls, and spreads as well as how to add features like stocks, charts, the Stock Monitor, and the Profit and Loss Calculator. Watch the video HERE.
- You can register for any of our upcoming LIVE webinars HERE.
- You can watch and view any of our past videos on our YouTube channel HERE.
- Register for a free IVolLive Trial HERE.
Not Too Hot, Not Too Cold
March 27, 2023
Last Wednesday, the Federal Reserve (Fed) raised interest rates by 25 basis points. The market's reaction? At first... mildly happy. By the last hour of trading, not so happy.
You can see this action at work in this one-month chart of the S&P 500 from IVolLive. As the markets fell going into the last hour of trading on Wednesday, volatility spiked. This is the inverse relationship we'd expect.
However, once traders had time to digest the news, they realized all was not lost. The Fed indicated plans to potentially slow down the pace of interest rate increases. This is good news as Mr. Market has not been a fan of rapid increases.
Removing this uncertainty could prove to be a major tailwind for the market moving forward. Remember, the market hates one thing above all else: uncertainty. Any time a major item of uncertainty is removed, we look to buy.
Speaking of which, the FDIC has found a buyer for a large chunk of Silicon Valley Bank's assets. First Citizens Bank will buy $72 billion of the failed banks assets, at a $16.5 billion discount.
The orderly handling of the Silicon Valley Bank carcass will help soothe investor concerns in turn, lowering volatility. Speaking of which...
The CBOE Volatility Index (VIX) remains volatile but overall trending lower over the past week as fears of a full-on bank run have receded.
The jagged mountain peaks formations tell us that volatility spikes are still a thing of the present, however. On spikes, we're looking for opportunities to sell options (since premiums are inflated); whereas on drops, we are looking to buy options (since option premiums are depressed).
Gold Continues to Outperform
Gold has been a safe haven for capital throughout the banking chaos:
Using this one-month chart from IVolLive, we can see that golds price (the blue line) continues to march higher. Implied volatility (green line) and historical volatility (orange line) remain elevated as well, making gold and select major gold mines like Barrick (GOLD) and Newmont (NEM) interesting potential targets.
Summing Up
The banking crisis, while stressful, might have solved a major problem for the Fed. It eliminated billions in market "froth" that could weigh down inflationary pressures.
In turn, this could accomplish what the Fed set out to do by raising interest rates.
Time will tell, but under current market conditions, tech, FinTech, and gold look interesting as potential trade targets.
Previous issues are located under the News tab on our website.