Tagged: Market Structure

Can’t You Be More Positive?

My lovely bride Karen said, “Maybe you should be less negative in the Market Structure Map.”

Only fort-two and I’m turning into a grousing old goat! I doubt many of you would disagree that I’ve sniped about the state of the markets the past few issues. There is method to my madness though. We want investor-relations professionals to be powerful, relevant, informed and cool. We believe knowing market structure is key to coolness.


Market Volatility

What a blast we had in the high country skiing last week! But now, East Coast, we here in Denver would like our snow back, please.

Everybody’s got an opinion on why the market is yinning and yanging. We, I believe uniquely in IR, look at market structure first. That is, we see the trading data and behavior, and then from it we ask, “Why did that happen?” (more…)

Trading 101

Thought for the day: “Chaotic action is preferable to orderly inaction.” – Will Rogers

Speaking of chaotic action, let’s review trading basics. We tend to think trading is buying and selling stock. To quote John Kerry, would that it were! Most trading today isn’t done for capital appreciation but to capture short-term divergence or to balance risk. (more…)

Sizing Up Twenty-Ten

Happy New Year!

I grew up in the Snake River Breaks northwest of Boise. In tiny Huntington, where I quarterbacked the eight-man high-school football team, a guy ahead of me several years achieved local fame at middle linebacker for the Boise State Broncos. BSU was I-AA back then, in the Big Sky league. Last night, it was great seeing the Broncos go 14-0, beating undefeated and 4th-ranked TCU in the Fiesta Bowl. The little big sky school has come a long way.

Speaking of a long way, here we are in Twenty Ten. What to expect this year? (more…)

Three Days of the Iron Condor

We’re back after a refreshing one-week break! Here in Denver we packed the house with visitors, the kitchen with delicacies, the slopes with our skis, and our bellies with generally excessive consumption. Good thing reality returns with a bite soon!

Remember that Redford flick from the 1970s, Three Days of the Condor? It’s a thriller about high-level conspiracy. In volatility trading, an Iron Condor is not conspiratorial, just an income trade. You sell two puts and buy two calls, with the spread between both always giving you an initial credit in your account (your highest possible return). If the underlying issue, say an individual stock or the S&P 500 Index, the SPX, trades between your puts and calls, your options expire and you keep one or both credit spreads. It’s a popular thing to do in sideways markets.


The heart of the IR job

I’m moderating the NIRI Virtual Chapter meeting on modern equity markets tomorrow 12/1 at noon ET. See nirivirtual.org for details.

As I move the midsection flab from a grand Thanksgiving holiday aside to get at the keyboard (a little humor there), the US equity markets are closing up again. IR folks and executives, what’s proving the most accurate indicator of market direction lately? And what’s it mean to your own market structure?


The Tale of Tail Risk

If you think “tail risk” is what happens if you grab a cat by the tail, well, that’s not far off. Did you know that an entire institutional subset is focused on the risk relative to theoretically ending up with a handful of grabbed cat? We’ll come to that in a minute, and how it might affect your stock.

First, these markets. Real, or more statistical arbitrage? Checking the data, something very unusual occurred last week. On November 4 in our data, the volumes we call electronic and speculative were dead, spot-on, even, at 35.8% of the total, each. That day, divergence in major market measures ceased, and volumes turned bullish. It stood out to us.


Volatility and Small Caps

We’ll spend the bulk of today’s note explaining why small-cap stocks increasingly find their shareholdings dominated by a few large quantitative institutions.

First this on equity markets: Last week we noticed a surge in “volatility trading.” We’ve written before about these tactics that capitalize on volatility as the asset instead of the direction of the markets or a given security.