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.
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 .
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.
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.