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A War Has Broken Out In The VIX Complex
(some background information on what this is and the termination event can be referenced in the following article-there was a massive one in second half of 2017-see circled chart cap 2)
What is the CBOE Volatility Index? (VIX)
The Chicago Board Options Exchange (CBOE) calculates a real-time index to show the expected level of price fluctuation in the S&P 500 Index option over the next 12 months. Officially called the CBOE Volatility Index and listed under the ticker symbol VIX, investors and analysts sometimes refer to it by its unofficial nickname: the fear index.
https://www.investopedia.com/terms/v/vix.asp
A War Has Broken Out In The VIX Complex
Back in January 2018, just weeks ahead of the infamous VIXtermination event on Feb. 5 2018 that wiped out virtually all inverse VIX ETPs in seconds, we predicted that such an event was imminent as a result of a sharp spike in the total outstanding Vega across the entire levered and inverse volatility derivative space, which had reached an all time high. Since then, while the VIX ETP market had been relatively quiet as a result of last year's fireworks which wiped out countless retail investors and other vol sellers, another VIX "event" is coming, and it will be the result of a silent war being waged between retail and institutional investors.
As we noted two weeks ago, JPMorgan's Bram Kaplan recently pointed out that after a year of relative quiet, the net exposure among VIX ETPs recently spiked to their largest net long position in 1.5 years, tilted long by ~$150Mn vega, which is just shy of the record vega exposure hit in early 2018 and which precipitated the VIX ETP implosion. However, unlike 2018, this time the trade is in the other direction as investors piled into long and levered VIX ETPs beginning in February, as soon as the VIX index fell below 16, to as JPM suggests. "position for/speculate on the next volatility spike."
However, when it comes to asset flows in 2019 - which has seen the S&P rise back to all time highs even as equity investors have been pulling money from equity funds week after week - here too the situation is not nearly as simple.
(well actually it is when you apply a little brian power-but the Upton Sinclair quote applies when taking "advice" from the big six bank's)
Commenting on the latest VIX flows, Deutsche Bank's Parag Thatte reiterates JPMorgan's point, observing that long VIX ETPs have seen significant inflows totaling $2bn YTD, as retail investors hedge equity gains. This record inflow into VIX ETPs, amounting to $2 billion in notional, is shown on the chart below.
(cap#3-what this is showing-and they say it's mostly retail investor's i.e. people like you and me- that has placed LARGE bets or hedges on volatility or large movements returning to the market's. Why wouldn't you as it has done nothing but 'up' since just after Apple warned on guidance for Q4 FY 2018 report. These are smart people trying to be safe- I have to believe that they also are positioned here as well but they will not admit to it as how many people do you know that still trade?)
Yet while retail investors, which traditionally prefer ETPs to hedge exposure, have been loading up on crash bets, institutional investors which traditionally prefer the greater liquidity of the futures market, are taking the other side of the volatility trade and as the latest CFTC commitment of traders report shows, the speculative net short position in VIX futures is approaching a record.
(cap#4- this is showing the opposite of the retail mkt i.e the 'Net spec positions that "it will all be good".)
(I.E. the 'system' is trying to show that this will not be the case so in other words "it's all good nothing to see here move along-incidentally the same exact thing habbened with the OpEx mkt starting in late 2007 leading up to the '08 activity.)
If one believes institutions, one look at the chart above confirms that not only is market complacency greater than its was either ahead of the Q4 mini bear market and February 2018 Volmageddon, but it is just shy of a record.
So who will be right - retail or institutions. Since both positions are at or near record levels, the answer should emerge in the very near future.
https://www.zerohedge.com/news/2019-04-13/war-has-broken-out-vix-complex
If the retail angle is correct than this will cost the big boy's massively on payoff's on these bets, or hedges-so you may see the huge disconnect between the two side's of this trade.
Any unfamiliar terms or language please visit
https://www.investopedia.com/dictionary/
World's largest plane makes first flight over California
LOS ANGELES (Reuters) - The world’s largest aircraft took off over the Mojave Desert in California on Saturday, the first flight for the carbon-composite plane built by Stratolaunch Systems Corp, started by late Microsoft co-founder Paul Allen, as the company enters the lucrative private space market.
The white airplane called Roc, which has a wingspan the length of an American football field and is powered by six engines on a twin fuselage, took to the air shortly before 7 a.m. Pacific time (1400 GMT) and stayed aloft for more than two hours before landing safely back at the Mojave Air and Space Port as a crowd of hundreds of people cheered.
“What a fantastic first flight,” Stratolaunch Chief Executive Officer Jean Floyd said in a statement posted to the company’s website.
“Today’s flight furthers our mission to provide a flexible alternative to ground launched systems, Floyd said. “We are incredibly proud of the Stratolaunch team, today’s flight crew, our partners at Northrup Grumman’s Scaled Composites and the Mojave Air and Space Port.”
The plane is designed to drop rockets and other space vehicles weighing up to 500,000 pounds at an altitude of 35,000 feet and has been billed by the company as making satellite deployment as “easy as booking an airline flight.”
Saturday’s flight, which saw the plane reach a maximum speed of 189 miles per hour and altitudes of 17,000 feet, was meant to test its performance and handling qualities, according to Stratolaunch.
Allen, who co-founded Microsoft with Bill Gates in 1975, announced in 2011 that he had formed the privately funded Stratolaunch.
The company seeks to cash in on higher demand in coming years for vessels that can put satellites in orbit, competing in the United States with other space entrepreneurs and industry stalwarts such as Elon Musk’s SpaceX and United Launch Alliance - a partnership between Boeing and Lockheed Martin.
https://www.reuters.com/article/us-space-exploration-stratolaunch-idUSKCN1RQ00M
saw nothing about this leading up to it and it habbened at 7am PST.
Yes he is really trying stay relevant isn't he. Moar money than brians
decided he wanted to do his own thing and never went for the huge success. Live at Ronnie Scott's a favorite of mine.