Russell’s Weekend Review

Growing up in Tennessee in March meant one thing – Spring. 20 years removed and putting salt down on the driveway after we got a nice dusting of frozen stuff (I use ‘stuff’ as it was sort of ice/snow that was slippery) this weekend I thought, “Doesn’t nature know it is supposed to be Spring?”

Options Action on CNBC – traders discussed a strategy on General Dynamics (GD) stock that would involve buying on weakness. Also, longer dated bullish spreads were discussed on Gold to participate in any sort of price break out.

Barron’s – The Striking Price column discusses the impact of rising oil prices on the equity market. One unnamed hedge fund manager predicts that $110 oil would result in a pullback in stock prices.  One trading idea mentioned was buying call options on the Select Sector Energy SPDR (XLE) exchange traded fund. This ETF is dominated by major oil companies which should benefit from rising oil prices. Also, putting on bullish VIX option positions was mentioned as a method to benefit if the market sells off. Finally, the article finishes up mentioning that although there seems to be some hot spots and reasons for the market to panic, it isn’t. Evidence of the lack of panic or concern is shown by the VIX index maintaining a relatively tame level around 20.

The VIX at 20.00 is indicating that traders don’t seem to be worried about the market. Much like Mother Nature and the weather not realizing it is ‘supposed’ to be Spring, doesn’t the market know it is ‘supposed’ to be a bit worried?