Trading VIX options has done very well for several of our members, they had a decent trade last week of over 50% and it looks like we are getting close to another trade (that 50% move was just the tip of the iceberg, the full move was in the triple digits).
The VIX also has an inverse relationship to the market so a rising VIX is accompanied by a falling market.
I use the CBOE's VXX for intraday analysis of the VIX.
This is the long term 60 min chart with a small double bottom and good 3C positive divergences.
The 30 min chart was in line with the downtrend, now it is showing a positive divergence. (leading which is the strongest).
What I have been waiting on is the tactical entry. I've been telling my VIX traders that I'd like to see the short term charts go leading positive as an entry signal. This is what the 5 min VXX leading divergence looked like yesterday (which was not enough for me).
Here it is today, so in my opinion, the trade is close by. I'd prefer to see a little more leading, but this is a big improvement already and is in the zone in which I would start considering the trade.
Finally, yesterday the SKEW Index moved up at already elevated levels. SKEW is another CBOE index, but unlike the VIX which tries to predict "predictable events", SKEW tries to predict events that are otherwise considered, "unpredictable", specifically Black Swan or Market Crash events. The higher the reading, the more likely a Black Swan will occur. At 100 the probability of a Black San is very low, 115 is about the average, above 115 and the probabilities increase exponentially. This would of course be supportive of a VIX trade which would be long by buying calls.
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