Stock exchange news. The situation of high uncertainty remains at American stock market. S&P500 index future is moving in the wide range with 1100 and 1200 end lines. Investors live in the expectation of the third stage of quantitative easing (QE3), but FRS is not quick about bringing clarity to the question. The levels of support are currently represented by flat zone bottom line, which is strengthened by the option barrier of 1100, and the local minimum of 1077; the nearest levels of resistance are represented by the range top line of 1200, 1250 and 1300 option barriers, as well as a 50-day and a 200-day moving averages:
Market volatility remains at high levels: the weekly range of S&P500 index future movement has amounted to 77.5 future points at the maximum daily range of 47 future points, which was observed on Friday. The expected volatility also remains at a high level, demonstrating violent fluctuations during the day by this. This week VIX volatility index was fluctuating from 34.05 to 43.84, in this reference on Friday the value of VIX was changing from 43.84 at the beginning of the session to 34.33 closer to its end. Such violent drawdowns of expected volatility during the day make volatility purchase more dangerous during this period.
The calendar of economic news issues for the following week:
As far as we can see, the following week is rather rich in important events, which can cause rapid rise of actual and expected volatility alike; however, taking into consideration the peculiarity of this moment, one shall operate very carefully when dealing with volatility purchase, searching for the point of entry to the position only at the moment of temporary lowering of the expected volatility level.
Prepared by: MF Academy Department of Options
