If so, what are your strategies? Anyone loading up on insurance? I'd think you can pick some great, cheap straddles out right now, longer term, and wait for that breakout capitulation or a bump lower on serious resistance. Regardless, it seems like there's no better time to start dabbling with cheap vol.
I gave up trying to guess what direction the VIX would be heading this or that week/month a long time ago. Can you believe it's now closer to single digits than the 20's? It should be easier to explain why it's should be in the 30's than the low teens. If anyone is long stock, it's a great opportunity to buy insurance. But if you are engaging in strategies like credit spreads, then the low VIX is irrelevant, since the options on both sides have been reduced. Betting on a strategy that benefits if the VIX rises seems like a no brainer,... except for the fact that, who can believe it has continued to drop to this point? I've got about 1,000 stocks on my watch list, and only a few have been high-lighted as being on "alert". That being, as being close to a price I want to know about. I thought I was going to get YHOO this week, but it got away from me. So close.... but not quite close enough. Between very few of my stocks being on "alert" and the amazingly low VIX,.... this is a market that concerns me as being over valued. But I'm not williing to place any bets on when the direction will change. Hence, I'm just sitting patiently and waiting, as i check my watch list a few times a day. The last trade I made seems like weeks ago, when I sold a $17 TRLG put. At the moment, I'm too nervous to bet with the market, and too nervous to bet against it. Oh well,.... good time to catch up on some porn.
If volatility does not come back by December, then sell your volatility positions for a minimal loss. The holidays always has low volatility. It's either next week, this September/October or late January.
What do you mean? It can fall a lot lower, yet. That said, I'm actively laying out bait. First batch went out in the spring, that was good, I expect this batch to be better...eventually. Patience is a virtue.
I agree it can drop lower. Hence the reason I stated that I'm too nervous to bet with it or against it. I'm just waiting patiently for any opportunity that suddenly comes my way.
The obvious answer is to buy vol. However it can go lower, also it can stay around these levels for some time in which case theta would eat you up.
very interesting chart below from the big picture blog http://www.ritholtz.com/blog/2012/08/vix-pullbacks/ i agree the vix can keep dropping but IMHO the VIX rises 20% before it falls another 10%.
Looking back further than the last 2 years you can see that the VIX can and has remained below 15 for extended periods (>2yrs).