Registered: May 2012
09-09-12 10:46 PM
Quote from dolbo:
Thank you. One more question, you mentioned that if VI goes down after earnings that this may be a losing trade if I hold it. Do you mean Dec12 VI may go to a lower level than it is now? Because I am thinking if VI spikes then goes back down to the current level that should be fine...
Also, VIX is currently close to all time low, VXAPL is about 30 which is also quite low. So I think it is unlikely that Nov12/Dec12 VI can sink much lower in November to hurt this trade. What do you think? I know anything could happen, but is my reasoning correct or I am way off in my estimates?
I think dec vol can get down 20 to 22 if your right and the stock is stable, and the market is stable. In the end, I have no clue if your right or wrong. I just think for this trade, you wait closer to earnings, then decide. Also, your using capital for a spread that is unlikely to change much over the next few weeks.