Settling Down

Tim Biggam talks about the market settling down, the VIX, and Implied Volatility.
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Tim Biggam talks about the market settling down, the VIX and Implied Volatility. After the market reached all-time highs at the end of July and did not hold, there was a strong reversal that brought the S&P down from about 1,985 back to 1,900. Tim sees a new trading range established between the high and the 1,900 floor, with the market likely stabilized unless an external geopolitical issue rattles the situation. The VIX has come down to the mid13 range after trading up to 17 last week. Implied volatility is at extreme lows, with momentum names such as TSLA and NFLX trading at multi-year lows in terms of IV. Tim is using those extreme readings to take a slightly bearish stance on such names. He is buying the TSLA August 29 255 puts and selling the 250 puts. Tim thinks TSLA could be setting up a double top, and sees a similar situation in NFLX where the RSI readings suggest the stocks are overbought. For NFLX he is buying August 29 450 puts and selling the 445’s.