The opening week of 2007 certainly provided hope of increased trading opportunities as the S&P 500 recorded its largest intraday price swing in over four months on Wednesday, and the VIX lifted some 15% to 12.46 on the week. It was also nice to see that the increase in implied volatility occurred not just in index products, but also in individual stocks, with even
staid big-cap names such as IBM (IBM - commentary - Cramer's Take), Microsoft (MSFT - commentary - Cramer's Take) and some utilities seeing a lift, albeit from historically low levels.
In the recent past, any incipient lift in IV has quickly dissipated once stocks stabilize, or at least prove they will hold recent lows, in this case, 1407 in the S&P 500. Maybe it's wishful thinking, but with earnings about to come steaming in next week and a backdrop of tanking oil prices that will force the market to look for new leadership, I believe we could see a slow trend higher in volatility and a trading environment characterized by much more two-sided action. And that, no matter which way we go, would be a good thing, as it will offer increased trading opportunity.
I will be out of the office most of the day, but will try to catch up and check back in before the close.
P.S. Will you be there when Cramer makes his next move?
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Steven Smith Blog No Panic to Puts Yet 1/5/2007 12:34 PM EST Only the IWM has seen measurable put activity.
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Steven Smith Blog New Year Dings In 1/5/2007 4:51 PM EST The first week back has been a shot over the bulls' bow.
Steven Smith writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He was a seatholding member of the Chicago Board of Trade (CBOT) and the Chicago Board Options Exchange (CBOE) from May 1989 to August 1995. During that six-year period, he traded multiple markets for his own personal account and acted as an executing broker for third-party accounts. He appreciates your feedback; click here to send him an email.To read more of Steve Smith's options ideas take a free trial to TheStreet.com Options Alerts.
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