VIX makes a 10 day high

BY ANDREW GIOVINAZZI

September 4, 2024

Yo Pit Crazies,

Volatility is flying! Where can you learn to trade it? Well right here.

This is what I call orbiting SPX. It goes up and it goes down. Friday we had a massive spike only to test the 5500 level today. What was the cause? Economic slowdown fears and maybe just maybe neither Presidential candidate has any ideas of how to fix anything. One wants to give everything away, the other wants to tariff everything away. It reminds of 2017 when DJT would hit the market with Tarriff Talk on a Tuesday and it would rip on a Wednesday. That is a recipe for some volatility in the short term and that is where we find ourselves.

It was such a nutty day that Mark and I put out two strangles in the Trading Desk. One in S&P 500 mini Index (Ticker: XSP) and the other in the Cboe Volatility Index (Ticker: VIX). Both were doing well by the EOD and we needed it since our Volatility Shares -1x short term VIX ETF (Ticker: SVIX) trades have had a rough start. With volatility, time can fix a lot of issues and I expect SVIX to be back.

SPX 10 DAY chart of SIGMA Vols on the bottom

But not today.

So how are we going to fix it?

Well we have breakout trades!!!

So in backbone strategy we are working a strangle in SVIX. That is a call and a put and it is going to pay well. But you know what we can do? We can buy another one. When SPX is orbing up and down, VIX and SVIX will get more volatile. We can trade that volatility.

The conditions in the Yield Zone might not be good for straight SVIX as SPX can chop around but that is why we have alternative strategies to trade around the core positions. DJT and tariffs were just creating noise back in 2017 but did not seem to do a whole lot in the long run. It is possible history repeats itself.

In the meantime we will trade the other options, no pun intended, in the Trading Desk arsenal.

To Your Trading Success,