Besides the Weekly options, the VIX is the best new product in a long time since the SPX. It spawned a whole other class of ETF’s and made all the old time Cboe seat holders a few extra bucks. The Bitcoin future and options will be out soon which might outshine them all. But really I want to talk VIX today.
I love these VIX Tweets with the big headlines, “Vol can’t get any lower.” I paraphrase the great Warren Buffett and say “VIX can probably stay lower longer that you call afford to keep buying VIX call spreads.” Everyone who writes for financial blogs wants to call the bottom in VIX. I can see it now, “I called the bottom so I know what I am talking about.” What really matters is what type of position we attach to the market call and what kind of position has “edge”. To be successful it is a combination of both. We find ourselves in what I call is a “hanging future”
For a few moments today VIX went backward and traders decided to worry about a tax plan, ECB rate hikes, FANG earnings and whatever else ails a screaming stock market all at once. I don’t see many backward to VIX cash markets at 13 VIX but we had one today. Usually VIX traders have a reason to let VIX cash fly.