Yo Pit Crazies,
Today we made another new low for VXX for the year yesterday
What a difference a year makes.
Last year all kinds of crazy predictions were circulating around:
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- Donald would create a coup if he did not win (sort of did!)
- Oil was finished (it is not)
- No one wanted the Trump Vaccine (didn’t turn out to be the case)
- Folks were buying guns and getting ready for the election results (still got the guns)
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While lots of things happened, none were as dire as predicted and some were a total flip-flop over what was expected.
Rarely are things as bad as people predict, and I think that is the nature of predictions. The unknown also seems worse than the actual.
Bears have predicted 29 of the last 20 market selloffs, yet here the S&P 500 (SPX) sits near 4500 once again.
Frank and I will hit this topic during Wednesday night’s Capitol Gains: October Surprise. There is hay to make. Get your seat now.
In the meantime I will link guns and vol just for fun — and it aint what you think.
Gun Vol and VXX vol at 1 year lows
I don’t believe in coincidences, but I had to laugh when I saw this.
Two of the most in-demand products of 2020 saw IV lows for the last 52 weeks yesterday
Maybe just maybe things could be turning around.
It is a sign.
It is an omen right in time for Halloween.
The worm is turning.
Demand for protection is going downm but over the last year these products lit it up, with the VXX trading in the 50s and Smith and Wesson Brothers Inc. (Ticker: SWBI) trading in the high 30s.
“IV30 52 WEEK LOW” is just that. IV 30 low means demand for options is at a one-year low.
The anti-2020 spread would be long SWBI calls and long VXX puts. SWBI is near 40% off of highs and VXX is trading at year lows.
The thought process being if we go into Crazytown again that SWBI will soar with VXX soaring. The VXX put loses just a $1, but the SWBI wins huge.
If we don’t go to Crazytown, VXX pays for SWBI. Makes a nice 2020 spread.
Frank will spell it all out on Wednesday and I will have a couple of trades for you as we move into the new paradigm.
The Rundown
Big Money Flow
Mark Sebastian runs our marque volume flow option buying service.
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- Mark filed OVV Nov. 19 39-strike calls at $3.50 on Monday with a 25% profit on the final sale. BMF is off to a good start..
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Pro Trading Room:
The Pro Room is Option Pit’s live access to Mark and myself during trading hours. Our Pro students post trade ideas with Mark and me during the entire trading session.
The Pro Room was very active Monday with lot of metals action:
Volatility Edge & Volatility Trading Club:
Volatility Edge is run by Mark and uses the proprietary Option Pit VIX Light indicator to guide volatility trading. The Vol Trade Club is run by me (AG), and employs a long strangle strategy that seeks to use VIX future decay to pay for upside VIX, VXX and UVXY options.
The Option Pit VIX Light Is Red, as contango steepens and the markets become more orderly.
Mark closed the VIX Oct. 20 18-strike puts for 69% gain in VIX edge.
Remember, a lot of vol strategies I use are market neutral. That means whether SPX or VIX go up or down, the positions still make money. This is a technique you can learn in the Volatility Trading Club and Volatility Edge!
To Your Trading Success,
AG