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I have to say I was a little surprised we did not get more kick out of the VIX.
When the S&P 500 goes from up 50 to only up 25, traders tend to notice.
Does this mean we are heading for a soft slow end of the week? It might.
We are noticing a change in trend in near dated weekly options.
For the first time in a while, near dated weekly options are not trading at a MASSIVE vol premium to the rest of the curve.
This means the cost of their decay is starting to equalize with the benefit of having all of that long gamma near dated long options give us.
Does this mean the bottom is in?
But it does likely mean that when we do get a dip lower, if you are looking for the VIX to explode you are going to be waiting for a while.
While I am not sure I like long the market, I may be starting to like short volatility as a substitute for being long stocks.
This is because I think the risk of a 10% drop in the S&P is far greater than the risk of a complete blow out high in the VIX at this point.
VIX Traffic LIght is Yellow
This means that VIX could be higher or lower 30 days from now and we do not have any ‘technical’ view of the VIX.
Your Only Option,
PS – Volatility defined by the VIX is still high across the board, if you don’t know how to trade just volatility of a singular stock you can get in trouble. Instead use it like I do with Sharp B.E.T.S to take quick hits in the market for big gains.