Weekend Review – 3/2/2014

Options Action was back after being preempted by the Olympics for a couple of weeks.  The President was making comments related to the situation in Ukraine so that was touched on a bit.  It was noted that VIX has been skeptical of this equity market rally which was a reference to VIX at 14.00 despite the S&P 500 closing at a record high on Friday.  An interesting comment was along the lines of, “If you have been looking for a reason not to chase the market at all-time highs the situation in Ukraine is giving you that reason.”

There was a single trade idea due to the extra discussion which focused on the emerging markets and is bearish in nature.  It is also pretty straightforward was the suggestion of buying a put on the iShares MSCI Emerging Markets ETF (EEM – 39.48).  Looking to April the trade suggests buying a EEM Apr 39.50 Put at 1.35.  Do keep in mind that markets may be under pressure (especially emerging markets) on Monday morning so the pricing may change by the time it can be traded.

Barron’s –

The Striking Price column discussed the global situation as well (I find it interesting when Options Action and the Striking Price column match up like this), but from the approach of the United States being a flight to quality.  The two ideas were a bullish trade on ExxonMobil (XOM – 96.27) or being long the SPDR S&P 500 ETF (SPY – 186.29).  EEM came up again with a ratio put spread that may end up long EEM on weakness as a thought of trying to catch the bottom of the weakness in emerging markets.  Since I spend time each week looking at EEM via the volatility markets I find the buying EEM on weakness idea sort of interesting.