Author Topic: VIX derivatives to blame?  (Read 800 times)

kober.paul

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VIX derivatives to blame?
« on: February 09, 2018, 09:06:50 AM »
Cramer says to watch volume on VIX derivatives to signal buy opportunity

Today's TVIX volume so far is on par with yesterday's volume of 150M (6x normal)

So, no end in sight to the pain?

Do you agree with Cramer that VIX derivatives are to blame for this volatility?

UnleashHell

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Re: VIX derivatives to blame?
« Reply #1 on: February 09, 2018, 09:11:24 AM »

Do you agree with Cramer ?

Never gonna happen.
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ChpBstrd

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Re: VIX derivatives to blame?
« Reply #2 on: February 09, 2018, 09:31:17 AM »
This is sort of like saying volume is to blame. Watch the volume; always goes up when stock prices are falling rapidly!

A more sophisticated argument is that the multi-billion dollar short volatility futures market trade finally unwound and institutions started selling shares to cover their losses and margin. This is why non-tech stocks declined in 2000-2001.

kober.paul

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Re: VIX derivatives to blame?
« Reply #3 on: February 09, 2018, 09:58:30 AM »
This is sort of like saying volume is to blame. Watch the volume; always goes up when stock prices are falling rapidly!

A more sophisticated argument is that the multi-billion dollar short volatility futures market trade finally unwound and institutions started selling shares to cover their losses and margin. This is why non-tech stocks declined in 2000-2001.

To be fair, that was the argument Cramer was making as well. However, he was saying that volume on these derivatives is a good indicator on when this unwinding is coming to an end. (hence the broader sell off to abate which is a prerequisite to a recovery)

L.A.S.

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Re: VIX derivatives to blame?
« Reply #4 on: February 09, 2018, 10:32:52 AM »
I know that it it is bad form to level ad hominem attacks, and I should debate the merits of the argument...

That being said, Jim Cramer is basically a financial rodeo clown.  It is hard to take anything he says seriously given how poorly he comprehends what is going on around him in the markets. 

In 2000 he is famous for writing a TheStreet article where he argues for loading up on tech stocks at the peak of the bubble.  During the 2008/9 credit crisis, he had a viewer on his show who asked him specifically whether the caller should "take money out of Bear Sterns."   Cramer's response was essentially that Bear Sterns was fine.... and the viewer had nothing to worry about.  Shortly thereafter Bear Sterns was basically wiped out, sold to JP Morgan for $10 a share -- fire sale price.  In the aftermath, Cramer pivoted and said that he thought viewer was talking about assets held at Bear Sterns as a brokerage, not whether the caller should or should not sell Bear Sterns stock.  I think the jury is still out on whether that is a reasonable misunderstanding.  Here is the clip: https://www.youtube.com/watch?v=V9EbPxTm5_s

And when he does have a legitimate point he seems hell bent on extracting full entertainment value from it.  Here is the infamous "They know nothing!" bit.  clip: https://www.youtube.com/watch?v=TaKnDMv6ceg

I think all of this adds up to Jim Cramer having very little credibility among more serious market participants.  Perhaps that is why he has a television show with a novelty sound-effects board instead of being a high level executive at a bank or working as a serious policy analyst with the government.

kober.paul

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Re: VIX derivatives to blame?
« Reply #5 on: February 09, 2018, 11:23:25 AM »
Oh, I totally agree what you said about Jim Cramer.

I don't know if you saw this segment. https://www.youtube.com/watch?v=NkytKDzCEeU

Jim complained that his recommendation of BS was taken out of context. In the above segment Jon Stewart completely destroyed that argument.

I also remember how Jim pumped up the internet stocks before they went bust. He used to ridicule people who advised caution and didn't believe in that hype.

The fact that he is still doing the same crap on CNBC instead of losing face and existing the field talks volume about the credibility of the network as well.

Anyway, the reason I mentioned Jim is I came across his argument that TVIX (and few other derivative ETF) volume reduction being a leading indicator to market recovery. He may be right on that one.

UnleashHell

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Re: VIX derivatives to blame?
« Reply #6 on: February 09, 2018, 01:06:31 PM »
Stewart showed him up for what he is. snake oil salesman. and a crook to boot.


if he's right about something then its nothing more than co-incidence.
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jinga nation

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Re: VIX derivatives to blame?
« Reply #7 on: February 09, 2018, 03:15:03 PM »
I've always felt that Cramer's Mad Money @ 6pm ET is a hindsight 20/20 show. A whole bunch of IFs, ANDs, and BUTs.

Nothing useful comes out of the clown's mouth. I know serious investors who ignore his mumbo-jumbo peddling for the masses.

Snake Oil Salesman is an apt term.
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hodedofome

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Re: VIX derivatives to blame?
« Reply #8 on: February 09, 2018, 07:01:05 PM »

facepalm

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Re: VIX derivatives to blame?
« Reply #9 on: February 10, 2018, 08:57:47 PM »
I like clowns,  but only at the circus.

jinga nation

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Re: VIX derivatives to blame?
« Reply #10 on: February 12, 2018, 03:03:51 PM »
Zerohedge is awful but this was interesting https://www.zerohedge.com/news/2018-02-06/here-what-was-behind-largest-vix-buy-order-history
ZH is bears. But their technical analysis guy(s) are apparently ex-Wall Streeters who got kicked out, and they are really good. So good that Bloomberg did a whole article on ZH.
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hodedofome

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Re: VIX derivatives to blame?
« Reply #11 on: February 12, 2018, 03:07:54 PM »
Zerohedge is awful but this was interesting https://www.zerohedge.com/news/2018-02-06/here-what-was-behind-largest-vix-buy-order-history
ZH is bears. But their technical analysis guy(s) are apparently ex-Wall Streeters who got kicked out, and they are really good. So good that Bloomberg did a whole article on ZH.

They are too bearish for me to visit their site but every now and again they have good info like when they copy and paste bank research.

This chart is pretty telling