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Black Swan Party

Black Swan Party

Provides thoughtful perspectives on the major risk drivers in financial markets, both perennial and temporary.

Election Year Seasonality Calls for a Long VIX Position
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Election Year Seasonality Calls for a Long VIX Position

Alpha isn’t just found—it’s created through market interaction. At Punk Rock Traders, we’re leveraging both variance premium and seasonality by balancing short VIX positions with a strategic long position. With the VIX poised for a seasonal spike in October and election volatility in play, we’re recommending the October 16th $16 VIX call option to hedge against previous short positions. Our recent VIX trades have been successful, and adding this long position aims to capitalize on anticipated volatility ...

Keep Calm and Short the VIX
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Keep Calm and Short the VIX

Understanding VIX behavior is crucial for traders. The VIX often reverts to its mode rather than its mean, making the mode a more practical target for trading. After the recent historic volatility event, the VIX has started to calm, suggesting a quieter September. With a focus on shorting VIX options, this article provides insights into capitalizing on the post- election volatility crush and the unique behavior of VIX European expiration options.

Volatility Has Collapsed, But Will it Re-Emerge? Using Fundamental Data to Predict Volatility
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Volatility Has Collapsed, But Will it Re-Emerge? Using Fundamental Data to Predict Volatility

The recent VIX spike to $65 was one of the most significant in history, but it quickly reversed, highlighting the rapid changes in market sentiment. Factors like the unwinding of the carry trade, low summer liquidity, and recession fears contributed to this volatility. However, the rapid normalization of the VIX curve suggests the market remains fundamentally strong, driven by resilient corporate earnings and a robust economy. Shorting volatility into November, especially post- election, appears to be a ...

Three Reasons Why Summer Volatility Will Likely Retreat and a Trade to Play It
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Three Reasons Why Summer Volatility Will Likely Retreat and a Trade to Play It

Myron Scholes noted that risk management often fails during systemic events. Recently, I accurately predicted periods of low volatility using my VIX theory, yielding significant returns. Despite recent market fears, I believe the true mean of the VIX is lower than current levels. The economy’s resilience, potential Fed cuts, and market improvements support this outlook. Shorting volatility with strategic options can capitalize on the current market environment.

Weak Jobs Report and Middle East Tensions Put Markets in Precarious Position
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Weak Jobs Report and Middle East Tensions Put Markets in Precarious Position

This morning’s jobs report revealed a gain of only 114,000 jobs against the expected 175,000, with unemployment rising to 4.3%, leading to a market selloff. Geopolitical tensions are also escalating in the Middle East, particularly between Israel and Hezbollah, following recent Israeli actions. This could provoke significant conflict, potentially driving up oil prices and increasing market volatility.

Three Things the Stock Market Can Tell Us About Elections
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Three Things the Stock Market Can Tell Us About Elections

Geopolitical risk events are often non- events for markets. The market cares only for the almighty ask and bid. By removing emotion from evaluations, stock analysis adds objectivity. Historical data shows the stock market tends to perform better under Democratic Presidents and that incumbents are likelier to win if the market is positive before elections. Understanding these patterns can offer valuable insights as we approach an emotionally charged election season.

Volatility Likely to Spike from Rising Middle East Tensions
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Volatility Likely to Spike from Rising Middle East Tensions

“Volatility is a symptom that people have no clue of the underlying value,” says Jeremy Grantham. Last week, we saw a spike in volatility, but the orderly nature of the sell- off and the VIX curve remaining in contango suggest it wasn’t the start of a bear market. With earnings season approaching and strong performance from the Russell 2000, the market shows resilience. Despite geopolitical tensions and potential risks, the current market structure and economic fundamentals point to a more stable outlook.

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The Ideas Wall Street Won’t Give You

Punk Rock Traders is invite-only. We’re a bespoke investor club helping traders and investors augment their portfolios with high-risk, high-return trade ideas and stock lists.