Wednesday, April 10, 2013

VIX ($VIX) trading at lowest levels, call to options!

Dow Jones at an all time high, breaking new records almost daily. The Euro currency is crawling back up to a 'comfortable' 1.30+ range again (despite the high unemployment, Cyprus and other turmoil), in short: the panic index is showing very low numbers, almost too low if you ask me. The VIX ($VIX) has lost over 28% in the past year; now a little under 13.

To me this is very interesting, especially if you factor in all the negative news that's coming from the Euro zone, as well as China with its recent downgrade by Fitch. Not to mention the rising tensions between North Korea and South Korea. It's not all that rosy within the U.S either, poverty levels are rising etc. All in all, after doing some extensive research and fundamental analysis I came to the conclusion that the most probable trade for me is the May 13 VIX call option, especially the 17 which is currently also holding the most open interest for this expiration date; it's trading at $1.05 as of this time of writing. Also, last Friday it spiked over 15!

From a technical standpoint there are some interesting notes to make as well. The spikes in the chart (and judging by the oscillator / indicators above), the fear gauge has a good chance to break out very soon. These two factors (fundamental and technical) make me decide to get the May 13 call option as soon as the markets open in a few hours. How this will play out? As always, I'll do a follow up when I sell.

-Happy Trading ;)

No comments:

Post a Comment


All opinions expressed, trade recommendations/advice on this website are solely of John van der Munnik and are not affiliated with any investment firm or any other organization. You should not make an investment only based using this website VDM Trading for your trading needs without seeking help from your own financial advisor.