The Inverse Skew on Gold

Implied volatility is the measure of the volatility of the price of a security. It increases when the market is bearish (when things are going down) and decreases when the market is bullish. When things are going better (up market) people are less nervous (down volatility). But when there is tumultuous economy, the VIX will…

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The Correlation Between Equity Markets

Correlation is simply a measurement of how stocks move relative to each other. Simply enough, the SPY and VIX have a NEGATIVE correlation, whereas the SPY and IWM, RUT, and other broad based market indexes have positive correlation. A quick recap on correlation – a positive correlation means that the securities move up and down…

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All That Glitters is GLD

The Feds are on the move, raising interest rates twice in 3 months (after an 8-year dry spell). The so-called “Trump Rally” is stagnant, nearing on the side of faltering. Basically, the economy is moving. There’s underlying tension, a certain uncertainty that cannot be named. So what’s a trader to do? Turn to gold.

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Duration Trumps Direction

Duration is an interesting variable to play around with. In bonds, the longer the duration, the more risky the bond is (thus the more it pays). In stocks, most people tend to just buy and hold, so duration can either be very good (the stock increases over time) or very bad (the stock decreases over…

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High Beta vs. Low Beta

Beta is the volatility measure of a portfolio compared to the entire market. The market has a beta of 1, so we look at stocks relative to that number. A beta greater than 1 would mean that the stock is riskier (but that also means there are higher rewards) and likewise, a beta less than…

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