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Bradley Kay at Morningstar would like to see an ETF that tracks the VIX:

Back during those halcyon days of early and mid-2008, when all anyone wanted to talk about was vix spikes, the indispensible counter-argument from some of us in the financial blogosphere was that arbitrary absolute VIX numbers are basically meaningless, and that relative context is the thing when it comes

Low trading volume has been the theme of the last few weeks of trading.  This is a historically a quiet time of year in the market. But, what was of interest was Thursday's strong rally on such low volume: except for the Nasdaq, the major indexes were up more than 1.5%.  So we wondered:

Historically, would there be any edge in shorting large rallies that occur on very low volume?

We defined a “large rally” as any day in which the underlying closes at least 1% higher than the previous day.  As for volume, we looked for days in which the volume is both below its 50-day moving average and is the lowest volume of the past 10 days.  We’re talking serious non-participation here.  We shorted the close of any qualifying day and bought back the position 4 days later.

There are plenty of ways to put on option trades that have a neutral outlook: straddles, strangles, condors, etc.  Whereas stock and futures traders are limited to whatever price action the market gives you, options let you take a view on implied volatility (vega), the passage of time (theta), and the rate of change of the rate of change of the option per unit move in the underlying (gamma).  Okay, that last one isn’t so obvious, but the idea is to enter various spreads that can profit from changes in the non-delta greeks, such that success doesn’t depend solely, or even primarily, on what happens directionally in the underlying.

The inverse relationship between oil prices and equity markets still seems intact: as crude has sold off over the past week, markets have lifted, and some analysts have even tried charting an hour-by-hour mapping of the correlation.  While we’re long-term bullish on oil (how could anyone not be?), we don’t anticipate an immediate or intense turn around in crude prices.  At

All you hear traders talk about these days is how they want to see the VIX spike before they proclaim a short term bottom is in the market.

Ultrashort ETFs have really gained in popularity and most of them (like SDS, DXD, QID) now have enough volume to make them decent trading vehicles.  The actual stock, that is.  The options are another story.

by condoroptions.com

A funny thing about calendar spreads is that, because both legs are at the same strike, it doesn’t make much difference whether the spread is constructed with puts or calls (as long as both legs use the same one). In pretty much every way—profit/loss profile, greeks, adjustments—a calendar call spread and a calendar put spread are virtually identical. So how do we decide which one to use? Generally, it’s a matter of splitting hairs.

by condoroptions.com

We’ve actually made this point before, but it bears repeating: iron condors have hard stops already built in. They’re called “long strikes.” So risk management is incredibly easy when you’re trading condors - it’s simply a question of determining how much capital you’re prepared to lose on any one position, and then selecting the appropriate number of contracts for your trade. Then fire and forget.

by condoroptions

Lehman Brothers became a favorite amongst speculators in the days following the Bear Stearns collapse, especially among those who didn't get to trade the massive move down in BSC and wanted to take a shot a hitting the lottery with cheap out of the money puts.

After it looked like LEH had eased the concerns of critics, they’re back in the news as everyone on the street suspects the company is in a real double-bind:

If Lehman announces to investors that it is raising $3 billion to $4 billion to enhance capital, it will prove its critics right and set the stage for another showdown. Lehman has effectively asserted that it is OK, and if it raises capital Lehman will seriously enhance the credibility of critics, and dilute management’s credibility at the very time it needs to be believed in the market.