Flash Backwards

• Posted by Adam Warner
• on October 23rd, 2009

Anybody watch FlashForward last night?  They mixed a bit of Katy Perry in with my sci-fi last night. Not to complain, just saying….Not exactly the 8pm TV fare from when I was a kid, unless I’m misremembering the time Joannie Cunningham made out with Jenny Picollo.

Anyway.

Another thought on why AMZN keeps going and going? The low volatility backdrop is almost a springboard onto itself. Consider a setup where the options marts priced in a 15 pt.move.  Options shorts could have absorbed the open, and barely had to chase. But instead AMZN factored in a move maybe half that. They got smoked from minute 1, with really no relief at any point. They’ve had to keep chasing, which likely then squeezes the next guy to chase, and so on. And lo and behold we now have a 25% move. It’s a real brutal lookiing squeeze.

But alas, there’s a bright side if you want volatility in general to click up. Until AMZN, there’s really been little pain involved in selling options, so no reason for anyone to stop. At least now we have some perception of risk again going forward.

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