So the past week or so is all the evidence you need to see QE is all that is needed for markets to smash to all time highs. The Dax which traded as low as 9600 two weeks ago, is trading at 10800 now which is a move of over 12%! Eurostoxx is trading close to 3400 and CAC is up there too. All this despite deflation, worsening data, and a possible Greek Exit.
Decoupling from reality is insane at this juncture, and while we see this one way action from these Indices I couldn't help but try a short play in the DAX which isn't really working out right now. I currently shorted the 10350/10500 call Spread for a credit of 75 ticks and bought the 10050/9800 put spread for 59 ticks, given me a credit of 16 ticks, with max risk of 135 ticks, and max profit of 260. I have till February expiration for some kind of pull-back in the Dax, which in my opinion is way overdone. Its outperforming everything right now, so if it continues higher especially over 11k then I think probabilities of a snap back is much higher.
Volatility in the Equity space has been unrepresented, with the amount of 1% swings in major averages so far this year seeming to be more then there were the whole of last year.
Bunds continue to race higher, and the Yield curve is as flat as you can get. Short Sterling continues to rise as UK GDP came in slightly weaker and inflation falling, with Mar17/June17 now trading at 7/8. I think its good value around here, so I've taken a small long position.
We see how it all pans out.
Decoupling from reality is insane at this juncture, and while we see this one way action from these Indices I couldn't help but try a short play in the DAX which isn't really working out right now. I currently shorted the 10350/10500 call Spread for a credit of 75 ticks and bought the 10050/9800 put spread for 59 ticks, given me a credit of 16 ticks, with max risk of 135 ticks, and max profit of 260. I have till February expiration for some kind of pull-back in the Dax, which in my opinion is way overdone. Its outperforming everything right now, so if it continues higher especially over 11k then I think probabilities of a snap back is much higher.
Volatility in the Equity space has been unrepresented, with the amount of 1% swings in major averages so far this year seeming to be more then there were the whole of last year.
Bunds continue to race higher, and the Yield curve is as flat as you can get. Short Sterling continues to rise as UK GDP came in slightly weaker and inflation falling, with Mar17/June17 now trading at 7/8. I think its good value around here, so I've taken a small long position.
We see how it all pans out.
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