May 22, 2017

High-Probability, Mean Reversion Options Strategy – Nasdaq 100 (QQQ) Hits Short-Term Extreme

The VIX is the hot topic right now among options traders. Most of us now know that last week marked the sixth straight decline for the S&P 500 (SPY). Yet, options traders are puzzled by the fact that the VIX (known among many as the "fear index") continues to struggle to push above 20. A push past twenty is viewed among many options traders as bearish for the market. However, there is a large contingency of options traders who view the lack of an accelerated move for the VIX as bullish. A reading below 20 means that investors are complacent as fear towards the current state of the market is low.  The bulls view the correction as short-lived and more importantly anticipated. I have to agree with the latter, because there are … [Read more...]