2019 Markets: Betting on Volatility (w/ Mark Newton) | Trade Ideas | Real Vision™

TL;DR

Mark Newton suggests buying VIX at 18 with a target price of 27-30 for short-term trade protection.

Transcript

Welcome to Real Vision's Trade Ideas. Today, we're sitting down with Mark Newton of Newton Advisors. Great to have you here. Thank you, Justine. So what are you watching in the markets today? I want to talk about the use of implied volatility, and why I think increasingly it looks quite attractive here after having been cut in half over the last th... Read More

Key Insights

• ❓ Implied volatility can provide protection against market downturns.
• ☠️ Market challenges including Chinese tensions and rate normalization debates influence volatility.
• 💁 Technical indicators like breadth momentum and negative chart patterns inform market volatility predictions.
• 🍉 Buying VIX at 18 with a target price of 27-30 is a short-term trade idea for portfolio protection.
• 👨‍🔬 Investors should conduct their research, assess risk tolerance, and invest accordingly.
• ❓ Market optimism may be challenged by technical and fundamental concerns.
• 🦔 Diversification through VIX exposure can hedge against potential market downturns.

Questions & Answers

Q: What are the main market challenges discussed by Mark Newton?

Mark Newton mentions challenges such as Chinese tensions, rate normalization debates, and the ongoing government shutdown posing potential risks to the market.

Q: How does Mark Newton recommend hedging against market downturns?

Newton suggests adding VIX exposure by buying implied volatility through options or futures, targeting a VIX price between 27-30 for protection in the next month.

Q: What technical indicators does Mark Newton consider when assessing market volatility?

Newton examines breadth momentum, correlation between treasury market and equities, and the negative chart patterns dating back to September to gauge potential market volatility.

Q: What timeline does Mark Newton suggest for the VIX trade?

Newton sees the VIX hitting 27-30 within the next month as the equity market potentially stalls out, recommending a short-term trade for investors to hedge their long equity exposure.

Summary & Key Takeaways

• Mark Newton discusses the attractiveness of implied volatility after a recent drop, suggesting that the VIX is still bullish.

• He highlights various market challenges like China tensions, rate normalization, and the government shutdown.

• Newton recommends adding VIX exposure to hedge against potential market downturns due to technical and fundamental concerns.