Thursday, 9 August 2012

Volatility coiling up for a jump

The VIX again closed a touch lower, but its a clear wedge, and at least a mini snap higher is due in the coming few days. Of course, even a 10% jump would only get VIX to the high 16s. Great huh ?

As I regularly note, a VIX under 20, means any index declines are to treated with great caution. Remember that Monday a few weeks ago, where we opened with VIX +26% to 20, and dow -239, it sure didn't close that way.


VIX, daily


There a few out there touting 'VIX to hit 10...or even <10' in the coming months, I'm not one of them. Even if the main indexes break >1422, I can't see VIX that low.

It remains a remarkably cheap time to buy VIX calls, as ever..timing is everything, and besides, whilst the main index trends are UP, its still kinda risky.

More to come!