Does VIX really matter?

[atticus]

1987 was interesting for locals. There was a group who was short 50-delta straddles the week before the crash who went debit ~$80 million when their deltas flipped and failed to buy wings into their huge vega-risk. Do not assume mean reversion means anything when swaps are blowing out and the credit markets are literally in a death-spiral.

Access to retail deposits is the new ibank model. A bunch of mergers in the works after-hours. Potential for a bull-reversal tomorrow.

Bills at 0.35%. Zero-bills at 0.04%.

 

[gnome]

The VIX "range" shifts from time to time.

Once the range is established, it's good on buys when high in the "current range", but only so-so on sells.

While the range is in the process of shifting (like possibly now) it's not any good.

 

[atticus]

Quote from gnome:

The VIX "range" shifts from time to time.

Once the range is established, it's good on buys when high in the "current range", but only so-so on sells.

While the range is in the process of shifting (like possibly now) it's not any good.

There is no trading range in VIX. Ask the guys short GS and MS CDS markets. Belief in a trading range gets traders short vol the day before the crash. I can't believe the shit I read on this site.

 

[gnome]

Quote from atticus:

There is no trading range in VIX. Ask the guys short GS and MS CDS markets. Belief in a trading range gets traders short vol the day before the crash. I can't believe the shit I read on this site.

Of course there is... you're SO FULL OF IT!

Gotta use a tool correctly... Apparently your "GS and MS guys" don't.... and you apparently don't get it either.

 

[sobemark]

Quote from Businessman:

Yahoo finance says the VIX reached 45 in 2002 and 1998.

Anyone know how high it got in the 87 crash?

my research guys say 170 on the VIX in 1987 crash

 

[atticus]

Quote from gnome:

Of course there is... you're SO FULL OF IT!

Gotta use a tool correctly... Apparently your "GS and MS guys" don't.... and you apparently don't get it either.

Again, the wealth of negative edge on this site never ceases to amaze me. Sure, a range of 10 to 170. Remember, it's not a loss until it's booked! The majority of posts on this site are made to fade. Don't forget to sell the rip and buy the dip!

 

[MKTrader]

Well, that's one opinion. I've found it to be quite useful, even now.

I'm sure people said "the speed and volatility of our current market environment" rendered it useless in 1987, 1990, 1998 and 2001-2002 as well. How quickly we forget that "this time" it's not really so different.

I've found high-probablility VIX setups during all the aforementioned periods up to the current environment. Not perfect, but good enough for me to pull the trigger if everything lines up.

And, for the record, it hasn't lined up yet.

Quote from Landis82:

Duh, I've been trading since 1981.

I'm all too aware of where the VIX has traded . . . I was a stock-index futures floor trader during the Crash of 1987.

In my opinion, you can throw it out the window right now. It's value as an indicator is rather nebulous at best given the speed and volatility of our current market environment.

It's not going to help you put on a winning trade.

Period.

 

[Cutten]

Quote from increasenow:

Does VIX really matter?...you got people saying, watch out taking ES shorts if VIX hits a certain high...your thoughts?...does VIX really matter or is it simply a responder to what people are doing in the cash SPX?meaning...the SPX drives and the VIX follows...kinda like Gold follows equities and never leads...

It matters but only in the way that all "level" indicators matter i.e. it is a guide, to be interpreted in the context of market action, not an absolute. My personal view is that a high VIX that arises through a slow grind higher (in VIX) is not a contrary signal, rather a warning sign. A high VIX that comes from a big 1-3 day spike is a far better fade. This time we got a grind higher - so IMO it will keep going higher until we get 1 or 2 day huge spike up (in VIX - down in stocks) days.

In 2001 and 2002, buying the VIX at 30 or even 37 was a great way to lose money fast. In 2004-2005 it never even hit 30. In October 1987 the VIX hung you out to dry, cut of your balls, then spat on your broken account balance if you dared to buy at 35-40.

There is no magic bullet in the markets. Pay your dues, learn the game, that's the only way to a true edge.

 

[increasenow]

but still, is not the VIX a "follower" of what the mass of people are doing in the cash market?...is it not a follower like Gold action is?...it seems ultimatelly, that VIX and Gold would follow the MASS of people trading the SPX cash?...please comment directly to this...

 

[S2007S]

I think VIX is headed into the 40's. Maybe today if we get another massive sell off which looks to be like were headed at the moment.