I still have mine open. Since I'm centered on my profit graph, I see no reason to close the position. Should I reconsider? Is it always right to lock in profits?
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Volatility implosion. So whats the outlook
- Thread starter KINGOFSHORTS
- Start date
I still have mine open. Since I'm centered on my profit graph, I see no reason to close the position. Should I reconsider? Is it always right to lock in profits?
"Since 1990, the month of December has averaged 21.05 trading days. The chart below captures each of those 21 trading days from 1990-2007 in composite form, with the mean for all December VIX values set at 100. In the chart, the pattern of decreasing volatility is most evident from the middle of the month to just before Christmas, during which period volatility drops from 2.4% above the December average (10th trading day) to 4.8% below the December average (17th trading day).
For the record, Tuesday is the 17th trading day of December, which makes the the historical low point in volatility for December.
I will not go so far as to say the that calendar suggests Tuesday is likely to be the last time the VIX dips under 42 for awhile, but those with an interest in historical context may wish to prepare for an increase in volatility, as the holiday âcalendar reversionâ effect wears off."
http://seekingalpha.com/article/112119-vix-holiday-lull-in-volatility?source=article_lb_articles
For the record, Tuesday is the 17th trading day of December, which makes the the historical low point in volatility for December.
I will not go so far as to say the that calendar suggests Tuesday is likely to be the last time the VIX dips under 42 for awhile, but those with an interest in historical context may wish to prepare for an increase in volatility, as the holiday âcalendar reversionâ effect wears off."
http://seekingalpha.com/article/112119-vix-holiday-lull-in-volatility?source=article_lb_articles
Attachments
Quote from Landis82:
I will not go so far as to say the that calendar suggests Tuesday is likely to be the last time the VIX dips under 42 for awhile, but those with an interest in historical context may wish to prepare for an increase in volatility, as the holiday âcalendar reversionâ effect wears off."
http://seekingalpha.com/article/112119-vix-holiday-lull-in-volatility?source=article_lb_articles
Historical data is nice to look at, but if you want to compare apples to apples, it seems like a chart that shows the December volatitly in '90, '98, '01 and '02 would offer more insight into our current situation. Even then, current events overshadow those four brutal years.
Quote from KINGOFSHORTS:
Do you think the volatility is gonna return after January? or is it going to be quiet the next few months. It was a good run writing OTM calls/puts the last few months.
After reading a few dozen posts it seems that most individuals miss the point by a mile. The arguments range from fundamental reasons, tea-leaves readings, crystal ball and other mumbo jumbo voodoo guessing.
The most prudent route for volatility sellers at the moment is to just buy the deep out of the money puts and calls as a hedge. While I don't see volatility selling as attractive at this point, one can just use the opportunity to hedge existing positions and still take advantage of unexpected volatility jumps.
There is really no need to guess the direction of the market...which by the way seems like a popular exercise on these forums.
Quote from 4444CJones4444:
Quote from dagnyt:
Here's what I know for certain:
IV has come down so far that I've already closed almost all of my RUT Jan positions and have moved into Feb and March iron condors.
Mark
I still have mine open. Since I'm centered on my profit graph, I see no reason to close the position. Should I reconsider? Is it always right to lock in profits?
Never mind, Mark. I see you answered a similar question in your blog. Still scratching my head, though.
Quote from 4444CJones4444:
"I still have mine open. Since I'm centered on my profit graph, I see no reason to close the position. Should I reconsider? Is it always right to lock in profits? "
No. It's (almost) NEVER right to ALWAYS do any specific thing. The exception for me - I always buy back positions when the get cheap. Someone else can have the last few nickels of any trade.
If you like your position, there's no reason to do anything with it.
Mark
Quote from Landis82:
"Since 1990, the month of December has averaged 21.05 trading days. The chart below captures each of those 21 trading days from 1990-2007 in composite form, with the mean for all December VIX values set at 100. In the chart, the pattern of decreasing volatility is most evident from the middle of the month to just before Christmas, during which period volatility drops from 2.4% above the December average (10th trading day) to 4.8% below the December average (17th trading day).
For the record, Tuesday is the 17th trading day of December, which makes the the historical low point in volatility for December.
I will not go so far as to say the that calendar suggests Tuesday is likely to be the last time the VIX dips under 42 for awhile, but those with an interest in historical context may wish to prepare for an increase in volatility, as the holiday âcalendar reversionâ effect wears off."
http://seekingalpha.com/article/112119-vix-holiday-lull-in-volatility?source=article_lb_articles
Interesting post and links. I donât have a definitive option on its relevance as I generally donât believe there is much correlation in looking at segregated month over previous years month in the implied. None the less an interesting take on Dec. Thanks
On the other hand this place always cracks me up how so many people like to tell ya how well theyâre doing after the fact. Funnier still is when they ask how to take their profits after nailing a move either in the delta or the vega.