April 26, 2017

Volatility Looks Interesting…Again

Volatility looks interesting…again.

Selling a few bull put spreads in UVXY and VXX looks enticing, but I would like to see the VIX line up with the other two before making a move.

The longer-term picture for higher options premium looks bright. According to a recent article in Barron’s, followed up with a nice chart b the talented Jason Goepfert, volatility hasn’t been this cheap in over 8 years. In fact, implied volatility on the one-month at-the-money VIX options is the lowest in history….this just means options are cheap.

According to Mr. Goepfert, ” Of the 45 days that the figure had dropped below 45%,  three months later the VIX was higher 42 times (93% of the time) with an average change of +21%. The three days that showed a decline in the VIX, in November 2006, soon reversed course and saw a higher VIX.

Now look to the far right…that’s right…options have never been cheaper.

options premium VIX

 

And I plan on taking advantage. Stay tuned for a few potential trades this week. Remember, patience is key. We already have two June positions on, but I would love to add 2-3 more before it’s too late in the June cycle to sell premium .

High Probability Options Strategy

If you are a believer in a statistical approach towards investing please do not hesitate to try my options strategies. I use simple mean-reversion coupled with probabilities for each and every trade. Give it a try, it’s free for 30 days.

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Also, due to the enormous amount of requests over the past week I have decided to keep my annual deal available for several more days. Thanks again for all of the support.

Kindest,

Andy