VIX was through the roof this morning. Should you refrain from going long any options when you see VIX this high?
Is there such thing as VIX too high?
- Thread starter turkeyneck
- Start date
Through the roof? Remember 2008? VIX was like 80%
yes and no
depends,
most market talking heads will tell you that when the VIX is at extremes its time to BUY and when its really low like under 14 its time to, well never mind, see the VIX according to the market experts these last 6 years only works when its skyrocketing to extreme levels, meaning buy when its high and sell when its low, but when the VIX gets to extreme lows like it has this past year many saw it as a sign of calmness and a time to relax and not worry when in fact it was at that time you should have been selling.....the VIX could easily go to 50, 60 70 100+ how long it stays there though no one knows, it usually doesn't stay high for too long but since the VIX has been at extreme lows for so long this breakout was going to happen eventually.
depends,
most market talking heads will tell you that when the VIX is at extremes its time to BUY and when its really low like under 14 its time to, well never mind, see the VIX according to the market experts these last 6 years only works when its skyrocketing to extreme levels, meaning buy when its high and sell when its low, but when the VIX gets to extreme lows like it has this past year many saw it as a sign of calmness and a time to relax and not worry when in fact it was at that time you should have been selling.....the VIX could easily go to 50, 60 70 100+ how long it stays there though no one knows, it usually doesn't stay high for too long but since the VIX has been at extreme lows for so long this breakout was going to happen eventually.
vvix doesn't sound all that anchored in reality.
If you think it will continue to rally, you should buy it. If you think the top in the VIX is in, you should sell it. You can make A LOT of money buying high vix and watching it go higher. You can lose a lot of money if it comes down.
Trading the VIX is an art of it's own. You always have to take into consideration the cost of carry (if you trade it via futures) especially if you are short. Moves like this morning are extraordinary and sadly, the only way to make money is to short the VIX futures. Just check the contract specs. Selling pops is very profitable except that you have to account for extreme moves.
If one day something happens the VIX could go to 100 in a session. You just need to make sure you have a few million dollars in your account in case your trade goes wrong (like this morning). If you trade it, use calendar spreads and options. But if you short it, PLEASE find a way to CAP it. I have a friend who lost 50k trading in a few weeks shorting the VIX futures during the Tsunamy period. Prior to that, he was making 3-4k per month shorting it. So always use protection
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Coming back on your original question, buy options although premium is high. They are priced for big swings. What's the alternative? Buy cheap and there's no volatily?
If one day something happens the VIX could go to 100 in a session. You just need to make sure you have a few million dollars in your account in case your trade goes wrong (like this morning). If you trade it, use calendar spreads and options. But if you short it, PLEASE find a way to CAP it. I have a friend who lost 50k trading in a few weeks shorting the VIX futures during the Tsunamy period. Prior to that, he was making 3-4k per month shorting it. So always use protection
.Coming back on your original question, buy options although premium is high. They are priced for big swings. What's the alternative? Buy cheap and there's no volatily?
The next major leg up of the VIX could very well be in the high 70's. I do believe it has topped. At these levels, it is a hard target really pin down.
I wish I sold the ES vol last night. I am not sure why today's daily chart doesn't show a jump and a reversal. But it seems, I am maxed out by my risk budget.
I wish I sold the ES vol last night. I am not sure why today's daily chart doesn't show a jump and a reversal. But it seems, I am maxed out by my risk budget.
How about buying protective put to hedge long stock? Is there a VIX level you wouldn't even consider going long put because most likely the hedge is overpriced?