VIX??????

I've been thinking the same thing for the last two weeks. The low volatility and low options premiums means you can get exposure to whatever move is coming fairly cheaply. I've been trying to put together a strategy to profit from this- would anybody like to carry this discussion down that path?

It seems that we should "go long" volatily here, what's the best way? I think some kind of a straddle two or three months out would work. You're not betting on the direction of the market, only that volatility will increase. Any other ideas?

Corey

 

If I could post a longer term chart of the Vix I would, but my computer skills are not that great. If you look at the early 90s and the late 80s, with the exception of Black Friday we are still high to normal on a historical basis.

I do agree that any time people are going long diapers and the vix is high really high, it has proven a good opportunity to load up.

 

I have been under the impression that the VIX in the low 20's is low but check out this weeks Option corner in Barrons which proclaims " It may take years for the VIX to settle down !" huh?

It outlines the fact that the vix historically trades around 17% with the stocks around 13 % on a longer timeframe. In addition, the put vols or skew have been going up big time which implies that a material correction may be in the offing-unless you are a bull which would then bolster the argument that the market climbs a wall of worry ( put skew)

Is'nt the market wonderful. One thinks lower the other higher.

 

I do agree that any time people are going long diapers and the vix is high really high, it has proven a good opportunity to load up. [/B][/QUOTE]

On Friday, Naz VIX had its lowest close since July. Hmmm. Kimberly Clark might have a sales spike in the offing.

 

If the vix is low and your long you'd better get some diapers because your going to load them up.

 

Rigel: “If the vix is low and your long you'd better get some diapers because your going to load them up.”

LOL. Truly LOL.

 

There is also a saying that goes

"If you’re in a fix you’re a vix so hit the bricks"

Something a friend told me a while ago and I have been making money everyday since (Honest).

 

after a high volatility, there will be low volatility etc etc

volatility is important in options, but if you are are able to choose the right entry points in indexes, you will have no problems, you will just make less money, but you have to know the right support or resistance levels - with low volatility, momentum or scalping is very difficult

 

I just read the Arvedlund piece in Barron´s and I´m baffled. This guy [Harindra de Silva] she interviews for the column says that the´historical avg is 17%` for the VIX

Where does he get this? I take a look at the $VIX for as long as it has existed and can only find 4 instances where it was below a reading of 18!

And in all of those 4 instances it just blipped for a few weeks or less and then shot up much higher.

I plotted 200/250/500 SMA in order to approximate historical averages and all three are between 28 and 27. No where near 17!!?!

de Silva adds. "You can sell the VIX today for around 23. That's a huge spread, even if you're selling longer-dated options, and a big anomaly to exploit."

I think you would be an absolute idiot to sell the VIX at these levels, instead you need to be loading up on volatility. The time to sell the VIX was after Sep 11 2001. Just my humble opinion.

Anyone else have any thoughts on this? I´m just baffled why someone would miss such a clear cut situation. Or is it me who is missing something?

 

The advice one finds in Barrons should carry a warning label. The options column is a source of nonstop nonsense.