Realized volatility and the Financial Crisis

The Financial Crisis is over so says the realized volatility

The Financial Crisis was very volatile and looms large in our memory.  The last President inherited the problem and latest President wants to avoid the next one.  I think as a leader I would rather have something  at the bottom of the cycle to start rather than at the top but it seems fate dictates that choice.  The nice thing about trading volatility is that we pick the entry.  Traders can choose to buy the bottom but it would be nice if a little blinky light told us when that was.

It just so happens there are blinky lights around these day to help traders negotiate volatility highs and lows.  I get a lot of questions from clients asking about scans for this and scans for that.  What I tell them is to get good at a finite amount of names and learn the products.  Below is a sample of the bottom end of my realized volatility list from TradeHawk.

Scanner by TradeHawk

The Hvol Scanner is handy.  What I find most interesting in a scan is when a sector “clusters”.  What does that mean?  A lot stocks in the same industry are acting the same way.  This bank is not better than that bank, they are just all banks.  Right now the market does not give two wits about banks.  The realized volatility is in the single digits and is touching a low since the financial crisis.  Remember when banks were burning a hole in the upside atmosphere in the SPX last year?  $BAC was a $15 stock ripping at 36% in early 2017 and is now barely at 16%.  Note all the big banks at the bottom of the realized vol in the green blinky lights.

The early bank buyers were very right in late 2016 and now under the glow of $QQQ might they are quietly trading near 2 year highs.  I like the IV in the Nov cycle for long delta strangles for the big banks.  Some I like better than others.

If you like the scanner check out commission free trading at TradeHawk/Tradier.

Learn how to evaluate volatility by becoming a Gold Member at Option Pit HERE.

Positions:  $WFC, $JPM

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