Stephen Sears discussed greed and fear in his column. For greed he talked about very bullish trading action in WebMD Health (WBMD – 22.46) this past week. Notably on Tuesday with the S&P 500 down, WBMD was actually up on the day. In addition to the bullish stock action, there was a slew of WBMD Call activity that appeared to be mostly to the upside. If you believe there’s more to WBMD on the upside he suggests taking a look at the WBMD Apr 22 Calls which were trading for 1.30 or the WBMD Apr 25 Calls which were trading at 0.40.
For fear one would automatically assume we are going to talk about VIX. However, Sears takes it up a notch and discusses the skew of SPX option prices. Skew refers to the shape of the curve that can be created by graphing the implied volatility of options with different expiration dates or different strike prices. It was noted that the angle of the skew of SPX option is at a 12 month high which indicates increased buying of out of the money put options on the market. These are the type of options that will only pay off if there is some sort of big sell off in the market.
Options Action –
I type from Carlsbad, CA where the 29th Annual CBOE Risk Management Conference in just a few hours. I’ve tried a handful of times to watch Options Action online with no success. As
No it is time for me turn my attention to RMC as I will be posting blog summaries of several of the presentations over the next three days. If you want to see if there is a session you want to keep an eye out for check out the schedule at www.cboermc.com