The one thing we noticed in studying these names in particular is that even though their option prices have come down quite a bit, they are in general still trading above the actual volatility of the stock. In other words, the option prices are predicting that the actual volatility will pick up from their current levels.
We have found some names where this is not the case and are building positions in them. But the data point that you can discern from this analysis is that although there seems to be more and more complacency in the general market [Intl Bus. Machines(IBM:NYSE)option prices are extremely low], in the segment of the market where debt is still very high, there is not yet significant complacency.
This sector of the market is particularly sensitive to interest rates and therefore the money supply. M3 numbers come out this afternoon.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter