Premarket Report for Friday, January 17, 2020

Options Activity:  The London traders opened and took out the “call wall” at 3300.  3350 has taken 3300’s place, for now.  Call volume in higher strikes already beginning to appear in the February expiration.  Put floor at 3300 and flip at 3245. Tomorrow is OPEX Friday and there are a lot of long calls to roll.

Valuations:  High dollar gamma stikes in calls a bit underpriced and puts a bit overpriced.

Volatility:  Just when you thought volatility couldn’t get much lower, it did.  Term structure positive.  Very high (new) volume at the 20 delta in VIX calls.  

Auction Market Process:  From intiative to balance to initiative …all in one day.

Macro:  China GDP took a significant hit from the trade war, growing at only 6.1%.  Trump just nominated Judy Shelton to the Federal Reserve’s board of governors.  Ms Shelton is a loud critic of the Fed and advocate for devaluing the dollar against other currencies and pegging it to the gold standard.  

• Taken together:  In addition to liquidity infusions, Technology and Financials have beat expectations during this early earnings season.  US retail posted a strong performance at the end of last year.  The US and China inked a Phase 1 trade deal.  Life is good!