Options Insight: How to Play Allergan

Kevin Kelly discusses current market trends, highlighting the influence of the Fed's comments on equity and bond markets. He analyzes the VIX, noting its low levels and potential for volatility spikes. Kelly also examines Allergan's stock, affected by a called-off Pfizer deal, and suggests a trading strategy. Finally, he speculates on potential Fed rate hikes, emphasizing the importance of the Fed's decisions on market stability.

What is one reason people are returning to equities according to the discussion?

• High bond market valuations

• Increased rate hikes

• Decreased market volatility

• Strong economic growth

What does an uptick in the VIX during up days in the equity markets indicate?

• Increased market confidence

• Traders are hedging their portfolios

• A decrease in market insurance costs

• A rise in interest rates

What major event affected Allergan's stock earlier this year?

• A $4 billion buyback announcement

• A successful merger with Pfizer

• The cancellation of the Pfizer deal

• A new product launch

What is Allergan planning to do with its generics business?

• Shut it down

• Expand it

• Sell it to Teva

• Merge it with Pfizer

Why might the Fed's decision not to raise rates in July send shockwaves through the market?

• It would indicate a stronger economy

• It would boost investor confidence

• It would suggest the economy is weaker than expected

• It would lead to increased inflation