Today's action was as rollercoaster-like as it gets. As we can see it on the 15 minute chart, the market opened relatively high and then dropped 2.5% and then within 1 hour or so it bounced back and down again. What's also interesting to note is the inverse correlation between the market movement and the volatility: When the market drops the volatility goes up. When the market falls, the volatility falls. It's also worth keeping in mind that the volatility often indicates which way the market is likely to move. For example, if the market is going up and the volatility is going up too then we can expect the market to fall in the short term.
SPY 15min Chart
So what's my trade for today?
I thought it's time to gamble a bit with an earnings play so I played #WYNN ( #WynnResorts ). Because earnings are dangerous it's best to stay as small as it makes sense and play both sides with a very wide strangle. What we are hoping for is that the price doesn't move much so that we can take advantage of the volatility crush (after earnings the volatility in almost all cases drop).