Friday, August 17, 2012

Best Of The Web 8/17/12 @JeffMacke @ritholtz @VIXandMore

Today's first article comes from Jeff Macke, who runs the Breakout blog on Yahoo Finance.

Particularly true in the current market, Jeff describes the Costanza Trade idea in which bad news is good and good new is bad:

"Experience only gets you in trouble. "It's not logical. You have to throw away everything you've ever learned about markets and stocks in order to put your money in," says Bleier. He and others have come to call this strategy the Costanza Trade after the Seinfeld episode when George achieves great success by doing exactly the opposite of what his instinct tells him."

To read the full post, click on the image below.

Next comes Barry Ritholtz, who runs The Big Picture blog.

His post (written by Hale Stewart) talks about the hurdles which countries face in trying to promote growth worldwide:

"1.) The US needs to engage in infrastructure spending.  Although easily conceived, practically impossible to implement considering the political players involved.

2.) The BRICs are no longer the source of massive global growth....

3.) The EU has serious structural problems that need to be overcome...

Put another way, muddling growth is probably here to stay for awhile."

To read the full article, click on the image below.

Lastly, Bill Luby from VIX and More explains an interesting strategy to get long volatility.  I particularly like this trade idea given the compressed volatility we've been experiencing lately.  Remember: periods of low volatility are followed by periods of high volatility.

"While the VIX is currently trading at 14.50, keep in mind that the best proxy for the price of the underlying for VIX options is the VIX futures for the corresponding month. So, with the September VIX futures at 18.95 at the moment, one could sell the September 18.00 puts for 1.50 and buy the September 24 calls for 1.05, pocketing the 0.45 differential. A more conservative trader might look to sell the VIX September 16 puts for 0.55 and use the proceeds to pick up a September 30 call for 0.55 or to defray some of the costs of the purchase of a more expensive call, such as the September 24 (priced at 1.05) mentioned above."

For the full post, click on the image below.

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