By Jud Pyle, CFA, chief investment strategist for the Options News NetworkToday's market rally was accompanied by a decline in the CBOE Volatility Index ( VIX). This is a fairly common occurrence: When the market rallies, the VIX has a tendency to decline as fear abates, and implied volatility declines. Two option trades that we saw in Paccar ( PCAR) and T. Rowe Price ( TROW) served to illustrate put-selling that was indicative of the declining fear levels.
The big rally today does not mean that we have put in a near-term bottom. We, of course, could retrace today's gains at any time. But it is worth noting that with today's rally, there was a marked decline in option premiums. We are still at historically high volatility levels, but at least in PCAR and TROW, there were signs that suggest at least one investor thinks those stocks could have put in a bottom for a while. Jud Pyle is the chief investment strategist for Options News Network and the portfolio manager of TheStreet.com Options Alerts. Click here for a free trial for Options Alerts. Mr. Pyle writes regularly about options investing for TheStreet.com.