BY ANDREW GIOVINAZZI
January 09, 2024
Yo Pit Crazies,
You will have a chance to jump into Weekly Profit Cycles again. Stay tuned.
This jiggity jiggity chart of the Vol of VIX index below (Ticker: VVIX) measures the volatility of the VIX options using the Cboe’s proprietary VIX calc. One thing you might notice is it does not stay very far below 80 for very long. VolMan is helping out by highlighting the lows for VVIX. Note we are at another one.
The problem is not that VVIX drops but that it stays there. When it stays there it savages the VIX option premiums.
In Weekly Profits Cycles, I get around that problem.
Here’s how.
When VVIX is very cheap, a lot of VIX puts are ITM
The reason for this is that all VIX options use the VIX futures as the underlying. Right now the VIX cash is 13.19 but the Feb VIX futures are 14.75. That makes the 15 puts look very cheap and in the span of time those puts go in the money if VIX does not get off the mat. That keeps the decay costs ultra low.
WPC will add a trade on Wednesday. I am looking to take VIX puts off this week that I own if the selloff in VIX continues to Jan expiration. I am looking at Feb already and started adding VIX strangles in Feb for OPMentoring and Weekly Profit Cycles.
Jan31 the Fed will pour cold water on folks thinking rates go down. Feb VIX cycle might be worth something. The SPDR S&P 500 Trust (Ticker: SPY) put spreads might come in handy too that I am holding in Weekly Profits Cycles.
To Your Trading Success,
AG
Andrew Giovinazzi
30-Year Trading Pro
See what's hot at option pit
CAPITOL GAINS: SMR Aug16 7 call closed for a 150% gain
DELTA STRIKE: VLY Mar15 8 puts closed for a 88% gain
PFE May17 26 calls closed for a 66% win
OP MENTORING: SPY Mar22/19 510 put calendars and 520 calls for 6.4% gain
OPTION SHOPPER: ERX Mar28 65 calls closed for a 90% gain