Thread by @ramahluwalia

1/ Markets are down and the Vix is...down.

Why is the Vix sub-14? And what is the Vix?

Debrief from my convo with a equity volatility options trader.

What happens from here?

Charts below.

#VIX #volatility #nvidia

2/ Vix closed at 13.5 today.

The VIX, or Volatility Index, is a measure of expected price fluctuations in the S&P 500 Index options over the next 30 days.

It is often referred to as the "fear index" or "fear gauge" because it represents the market's expectation of volatility.

3/ The Black-Scholes (or related equations) are used to back-out the implied volatility. Observed put/call prices on front-month contracts

4/ This is the Commitment of Traders report on the Vix published by the CFTC.

Red = Dealer
Green = Asset Manager (think Bridgewater)
Blue = Small speculator

Rules of thumb:
- Avoid being on the side of small speculators
- Avoid crowded positions (which is the case now)

5/ Nvidia is going parabolic.

A site to behold.

Prior thread shows Nvidia does have a multi-year fundamentals trend behind it. Nvidia is not Cisco.

But, Nvidia's PEG (P/E ratio divided by growh rate) - a loose proxy for assessing value - is > 5

https://twitter.com/ramahluwalia/status/1663887193218113539?s=20

6/ One of my favorite indicators - Smart Money vs. Dumb Money index.

Each index is an amalgamation of various indicators (e.g., retail open interest, the COT report, etc.)

Short-term this suggests close to near-term top. )

Note: All indicators are fallible.