tasty Extras

Too Tough For Tom (with Jared)

tasty Extras

There are times when Tom receives an email and forwards it to our Research Team. Jared Vacanti combed through these questions with ones he thought would be of interest and ones which might be too tough for Tom. Jared came on with one purpose. Try and stump Tom!

The first question to Tom was from Scott in Bellevue, Washington: Does a high Put/Call ratio indicate an upcoming down move (or up move)? Tom answered that he thought the ratio had no indication of an upcoming move. Jared explained how it was a meaningless lagging indicator with many false positives which confirmed Tom was correct.

The second question posed to Tom was from Harry B. in Toronto, Canada: Are there times during the day that are better to trade than others? Tom replied “that the times that are best to trade are the times that best fit your schedule and to trade when you can.” Jared asserted that there are certain times of the day where the bid-ask on spreads were tighter. Jared showed the ATM Put volume in the SPY which showed that most people trade right on the open, after lunch and on the close.

The third question posed to Tom was from Sarah in NYC: Does the VIX spread mean revert? Is it at a high or low level right now? Tom answered yes, that since Volatility is mean reverting so is the VIX spread. Jared displayed a chart which showed Tom was right again. The VIX spread is driven by what is happening in the VIX contract.

The fourth question for Tom was from Frank in South Chicago, IL: Frank has added SKEW to his watchlist and asked, “Does VIX and SKEW have a high correlation?” Tom answered that he thought that they did not have a high correlation. Jared revealed that Tom was right again (much to Jared’s dismay).

The final question posed to Tom was from Brian in Tennessee: If summer months typically have less volume or less trading, does volatility follow the same patterns in these months (low volatility in summer months)? Or as Jared put it, “Is Volatility seasonal?” Tom’s final answer was that Volatility was random and did not follow volume patterns. Jared reluctantly agreed.

Watch this new fun segment of “Too Tough For Tom” with Tom Sosnoff, Tony Battista and Jared from our Research Team for a lighter segment about questions you may have and see if they can stump “The Creator”, aka Tom.

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