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SodaStream International Ltd. (SODA) Message Board

  • drjohnlong drjohnlong Oct 17, 2013 8:43 AM Flag

    My apology to the board

    I miscalculated the debt default standoff. I couldn't believe that the Republican conservative wing wouldn't go through with a default after all their positioning. Hopefully the two parties can work together and solve problems rather than tear each other apart. But again, that would likely be a miscalculation on my part.........

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    • I know you watch UVXY a fair amount. I had my eyes on it, as well as the short-term VIX (month 1 and 2 futures of the VIX) that UVXY is priced on. I believe that as a result of the volatility levels, there was absolutely no conviction behind a possible default. It just wasn't ever priced in, and it wasn't close to expected. It was totally different 2 years ago the first time this nonsense came up. The short-term VIX was in backwardation for almost 2 months as a result of that confusion, but only a couple days this time around.

      Even today we are seeing the results of the removal of uncertainty. While the overall market (S&P) is basically flat, UVXY is down close to 7% right now. The VIX is down 10% to around 12.95. That is a big move in a short period of time, and it's a direct result of a crash in that front month contract in the VIX. Now, the front month implied vol. is at 13.23. Only Tuesday it closed the day at 18.33 when the front month contract was 100% of the Short Term VIX. That's a huge move! And right now, that front month contract weight is more than 90% of the Short Term VIX, which is why UVXY is still falling hard as that front month contract crashes. But it's getting close to being about as low as it can go.

      My point is to watch the implied volatility and not get sick by whatever junk the media is feeding. Doing that should have given you a clue that the default nonsense was just that. If anything, now is shaping up to be a tough time for the overall market. Risk levels are getting very low and the S&P is back up to a point where it needs to fall back a bit. UVXY at all time lows is a caution point.

    • Hey Doc - No apology necessary my friend. I know I'm not alone in my appreciation of your sharing your take on the possibility of default. None of us have a crystal ball, and we all benefit from the thoughtful opinions of others. I especially appreciate your making your argument without personal attacks or political rancor. Besides, your not actually wrong yet; in ninety days you may be proven right. For all our sakes, let's hope that doesn't happen. - Jim

      Sentiment: Strong Buy

    • No apology needed...

    • They aren't cutting my SS togive corporations another tax break.

      GLTA

 
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