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  • A sub-15 VIX (Friday close 14.7) is rare, says Goldman Sachs, and it doesn't stay below that level for long (true post-2007, pre-crisis not so much). It's not just the U.S., but implied volatilities have dropped across every global index followed by the Goldman team. Another sign: The put/call ratio has declined to its lowest level in more than 3 years, as players pull off hedges.  [View news story]
    Well good luck bonsaibean, just because it is at a "seemlingly low level" doesn't mean it can't go low. It can and it will.
    Aug 13, 2012. 06:08 PM | Likes Like |Link to Comment
  • Why Is The VIX ETF Near An All-Time Low? Same Old Contango  [View article]
    Good lord.... Why would ANY ONE want to buy and hold VXX??? "how low can it go?? Is a buy"?? I hope you loaded your boat, man, or truck. How many shares do you want? I will sell it to you. Hold it for 5 years??? Come on! I will sell it to you, any time, any day. If you don't know how VXX works, don't touch it. If you think the world is coming to an end, instead of buying VXX, why not just short SPY or something!!???? And if your statement begins with "if", you are guessing, and your guess is as good as any one else's. While waiting for the world to end, you suffer from the contango. And what if the world doesn't end as you expected?? What if VXX goes down to $2 before the market starting to "correct"? So it will double, triple, quadruple, and goes to $8 a share. The only way to hold VXX for 5 years is to short it. Oh you say it wouldn't go down to $2? Today it is at $13.35. Without the split, it would be $3.34. Not too far off I tell you. So I am not sure why you think it would be difficult to drop below $10 and what your logic is behind your thought. Maybe not this year, one day it will. It has been there if not for the split.
    Jul 15, 2012. 12:01 AM | 1 Like Like |Link to Comment
  • Will The 'Greekend' Bring Higher Volatility? A 3-Way Weekly Option Spread  [View article]
    I don't get it. First of all, the title of the article is a bit misleading. It's not "3-way" as in up, down and sideways, as if you can make money no matter which way the market goes, it is just a "3-legged" trade. Secondly, obviously this is a bullish trade with a maximum risk of $2000. Why don't you just risk $2000 and buy some straight calls!!?? I didn't look, but won't you make more money if you are right? Why all these fancy stuff? If you want to control your risk, then go a few more months out rather than using the weekly. Lastly, if you bet VXX is going up, which means you "guess" the market will go down. Why don't you bet against the SPY or QQQ or whatever, rather than playing the VXX, which is more unpredictable, you could be wrong even if you are are right due to the contango/backwardation? Or at least these effect might cut into your profit. So why not go with the index ETFs instead, which are more straightforward?? Sometimes I think people make things way more complicated than it should be. And of course if you have to pick a direction, you are probably wrong more often than you are right anyway. So really the method to make consistent income from the market is to play "3-ways" at the same time, in which you cover all possibilities the market can go, not just 3-legs.
    Jun 18, 2012. 12:12 AM | Likes Like |Link to Comment
  • A contrarian signal if you ask Bill Lubby, over 1M put contracts have already been traded on the S&P today - nearly 2.5X the average and following 913K yesterday. Over the past couple of years the "rare instances" when put volume reached 1M typically coincided with bottoms in stocks.   [View news story]
    Oh please....

    "Over the past couple of years the "rare instances" when put volume reached 1M typically coincided with bottoms in stocks" is a fact, a stat, it may happen again this time, it may not. But it is based on history.

    Whatever else you think is just speculation. Your guess is as good as any one else's. Please, if you really know what's going to happen, you should be on your private island counting your money, not on a forum posting. Only when you admit that you really have no idea what is going to happen will you be able to make money consistently.
    May 21, 2012. 03:21 AM | Likes Like |Link to Comment
  • Contango And Backwardation's Relationship To VIX Futures Convergence  [View article]
    The problem with writing naked puts on VXX is, you just never know how low it can go. Before this year, VXX has never closed below $20. This year not only it dropped below $20, it closed below $16 in late March. It was a surprise for me. I wrote 100 contracts of naked Puts and I was sitting on a seemingly hopeless drawdown. Of course a bit of scare in the market sent the VIX spiking and I was golden again, during this process I have learned a lot of the contango effect. Lesson learned. It's only April, selling naked puts on VXX and being assigned at the current level or lower might still work for the next few months, would you agree?
    Apr 25, 2012. 02:27 AM | Likes Like |Link to Comment
  • Contango And Backwardation's Relationship To VIX Futures Convergence  [View article]
    You might win most of the time, but when the VIX inevitably spike one day, your naked call position will be in a lot of pain, and could wipe out your gains from the previous months. But of course a "spike" won't last, that's why it's called a spike. VXX has a tendency to go down because of the well published contango effect. It is not meant to be a buy and hold. You buy low, get a spike, you get out. In a long run, like you pointed out, this thing is probably a better short candidate. I think it is flawed!! Although improbable, I wonder if it can eventually go down to 0, which I think is not impossible. After all, the VIX is between 10 and 50 most of the time, VXX came down to the teens from $480 during the same period of time. I only wish I knew what I know back in 2009! A 500 strike put will be $483 in the money today! LOL!
    Apr 25, 2012. 01:20 AM | 1 Like Like |Link to Comment