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Volatility traders haven’t been this sure of a stock market shock in almost two years.
These investors buy and sell options on the CBOE Volatility Index, or VIX, as they predict swings (or a lack thereof) in the S&P 500. The VIX typically spikes when stocks decline quickly and falls in a steadily rising market. And right now traders are not betting that things will stay quiet.
The cost of bets on a quiet market — used either as hedges by traders who expect volatility or as directional wagers that prices won’t swing around too much — is lower than it has been at any point since October 2015, relative to the cost of a bet on an increase in the volatility measure.
In other words, volatility traders have taken the restrictor plates off their bullish VIX bet and are fully embracing the idea of a stock market shock.
- Wall Street is bullish about Apple as shares soar to all-time highs
- Wall Street thinks you’ll love the next iPhone
- Apple’s iPad slump is over
- Apple CEO Tim Cook dodged a question on what Trump said about him
Banking jobs “will completely change,” according to UBS chief operating officer Axel Lehmann. European fintechs are “valued too highly” and consolidation is coming, according to a tech banker. And Oxford University is getting into fintech.
In markets news, bitcoin cash has secured its place as a top cryptocurrency within a day of entering the marketplace. Bitcoin might split again — here’s what you need to know. And CBOE has partnered with the Winklevoss twins’ bitcoin startup.
Tesla reports its second-quarter earnings after the bell on Wednesday. Here’s what to expect. The company’s battery tech director has left the company. Hedge fund billionaire David Einhorn said Tesla currently has only enough cash for the next three quarters. Still, traders betting against Tesla are growing tired of losing money.
In tech news, Amazon is staffing up several new teams to go big in cloud and distribution tech. And for an industry to be “safe from Amazon” it must have one of five traits, according to Morgan Stanley.
Elsewhere in company news:
- Theranos just settled its lawsuit with Walgreens
- Costco’s chairman and co-founder has died at 75
- Facebook has developed a low-energy Bluetooth module for a mystery hardware device
- The company that makes Oreo cookies names a new CEO
- “Wonder Woman” boosts Time Warner
- Online reviews for Chipotle signal something potentially very worrying for the brand
Ferrari’s CEO had a hilarious exchange with a Wall Street analyst about SUV rumours. The Lexus LC 500h takes luxury hybrid tech to a new level.
Lastly, take a rare look at the enormous mansions hidden behind the Hamptons’ famously high hedges.
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