Hey there Trader,
Often, traders take Christmas Eve off.
After all, the market is only open until 1pm EST.
But taking today off is a mistake, and I’ll tell you exactly why I’ll be looking to be in–>out of quick positions in today’s trading session.
First, let’s talk about yesterday.
As we predicted, the air came out of the VIX.
At one point it was threatening to break 22.
Thanks to a nasty end of day sell off, it stayed above 23, but still closed down about a point.
January VIX futures took a nice hit to the face dropping 1.15, and the curve went back into a contango, shown below:
All this goes to say… I think the easy money has mostly been made by being short volatility.
This is why I spent most of the day yesterday closing existing short volatility positions.
In fact, given the risks over the weekend with the stimulus bill, I would not be surprised to see volatility go up a touch as the day progresses today.
Knowing most of my positions are closed I’ll spend the few hours we are open today looking for trades that I can flip out of in an hour or two.
Days when the market is going to be slow (like today, Christmas Eve) can be great trading days because the market whips around more than most traders expect.
And just because it’s a half day, doesn’t mean I am taking the day off.
The only thing I want to take off ever… is winners.
LIke the ones I took off yesterday, which were set up on Monday’s huge VIX spike.
Forecast: The VIX light is RED.
Your Only Option,
DISCLAIMER: FOR EDUCATIONAL AND INFORMATION PURPOSES ONLY; NOT INVESTMENT ADVICE. The materials presented from Option Pit LLC are for your informational and educational purposes only. Neither Option Pit LLC nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational and educational purposes intended is at the user’s own risk.
DISCLAIMER: OPTION PIT LLC IS NOT AN INVESTMENT ADVISOR OR REGISTERED BROKER. Option Pit LLC is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented materials. Specific trading ideas or strategies discussed in the presentations or materials are entirely illustrative and do not constitute the solicitation of a transaction (or transactions) or a recommendation to execute a particular transaction or implement a particular trading strategy.
DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions.