My Trade: Buy the NYT Oct 10 Calls for $1.10

Risk: $110 per a lot
Reward: Theoretically Unlimited
Breakeven: $11.10

Greeks of this Trade:
Delta: Long
Gamma: Long
Vega: Long
Theta: Short

Paper bought 855 AIZ June 37.5 Puts for $.50 (19.4 times usual volume)when stock was trading $43.99
Paper bought 400 EEP July 27.5 Puts for $.575 (3.5 times usual volume)when stock was trading $29.72
Paper bought 1500 AXL April 13 Puts for $.30 (5.3 times usual volume) when stock was trading $13.44
Paper bought 1570 TWX April 55 Puts for $.71 when stock was trading $56.17
Paper bought 600 BRFS June 20 Puts for $.55 (23.4 times usual volume) when stock was trading $21.99

Paper bought 6000 SE June 31 Calls for $.55 (3.1 times usual volume) when stock was trading $30.16
Paper bought 300 UEPS April 7 Calls for $.55 (9.0 times usual volume) when stock was trading $7.12
Paper bought 500 DSX May 11 Calls for $.30 (5.6 times usual volume) when stock was trading $10.31
Paper bought 370 TMV May 61 Calls for $1.35 (2.2 times usual volume) when stock was trading $56.02
Paper bought 239 GKK Aug 5 Calls for $.40 (3.2 times usual volume) when stock was trading $4.86

Paper bought 19,500 NYT Oct 10 calls for $1.0 (38.2 times usual volume) when stock was trading $9.82
Paper bought 6000 SE June 31 Calls for $.55 (3.1 times usual volume) when stock was trading $30.16
Paper bought 10,000 LXK Jan 2014 30 Calls for $1.65 (13.6 times usual volume) when stock was trading $26.19
Paper sold 10,000 HNZ Sep 75 Calls for $.10 (5.2 times usual volume) when stock was trading $72.07
Paper bought 3000 PLCM Oct 12.5 Calls and Sold Oct 10 Puts for $.05 credit (7.2 times usual volume) when stock was trading $10.85

Additionally, the BOJ has been perusing historic measures to try lift Japan out of its two decade long slump, via very creative quantitative easing. Kuroda told the press that the BOJ will discuss purchasing even more bonds, and potentially with more duration.  According to sources, the BOJ currently buys assets through its 76 trillion-yen asset-purchase program. This translates into over $800 billion USD.

Many skeptics, like Kyle Bass of Hayman Capital, are rather nervous of the measures being perused by the BOJ. Mr. Bass, who made $500 million betting against subprime mortgages, points out that Japan is more levered than Greece, among many other astute observations.

The BOJ’s aggressive measures are definitely worth watching, especially as they translate into market action.

salerno.mark.a@gmail.com     

The Volatility Index’s 200 day moving average is 15.94, its 100 day average is 15.01. Its 50 day average dropped significantly to 13.50 with an even lower 20 day average at 13.26. The VIX had been averaging 25.8 from 2008 to 2012, but has now been trading at its lowest levels in six years thanks to a bullish market (even after fears surrounding Cyprus). VIX values greater than 30 are associated with large amounts of investor fear and uncertainty, while values below 20 represent a complacent market.

VIX options are used to hedge against market declines because its value generally increases as stocks decline. The Volatility Index can move sharply, increasing or decreasing significantly in a short amount of time. VIX call volumes have been setting records of late. March 19^th set the single-day volume record totaling 1,392,621 contracts. Three weeks earlier the record had been set at 1,388,634. There is a great deal of speculation but no definite answers surrounding the new interest in VIX. Still VIX options are rarely exercised. In 2012 95% of VIX options expired worthless and that trend has continued through March of this year.

—
Edmund Gray
KOTM Contributor
Edmund.Gray@gmail.com