This August was my best month in 10 years of trading options. Coincidently, the VIX hit 37.5 this month, which is a several year high! For my type of index option trading (buying straight calls and puts), a high VIX really helps make the systems work at maximum efficiency. However I should mention that since July 1st of this year, I have totally abandoned the OEX index options and switched exclusively to the SPY options. As the Volatility Index (VIX) has risen higher and higher as the year progressed, the OEX options became increasing more difficult to trade. The attached chart shows the sharply increasing VIX this year which has even surpassed June & July of 2006. This high volatility that makes option trading so profitable is a curse for a stocks trader who only trades the long direction.
Exactly my thinking.. would think overall daytraders made far more money this month since they "depend" on volatility... Not to mention the brokers who probably also made a killing.
Flat, took a beating first two weeks and have been spending the rest of the month making it back. However July was a great month.
Next year would take a bongo beating vacation with money managers or go on a fly fishing trip to Montana's streams or go snorkeling with Sting Rays in Cayman Islands. I will do what the money managers do. Put my cash in T-bills and money market accounts earning a safe 5 % a year. No need to take a pounding and volatility and absorb losses and trying hard to pull up. This is an exercise in stupidity. I maintain a healthy 6-9 % return in my portfolio per month, its obliterated by this 300 point down and 300 point up days in the market. The market is too volatile, Vix at 23.7 is still very high for predictable and consistent outcomes.