After reaching a low of 11.10 today, the VIX closed at 11.57.
Having been in a low Vol Environment for a while, I believe that this bounce off of the S2 Pivot Point intraday today, can be a potential low for the index.
I have chosen a synthetic long position to play this out, over the next 60 days.
More specifically, I sold the Nov 2018 14/12 put credit spread...
57.5/50 Put Vertical Debit Spread @ $3.01
Prob. of Max Profit = 10.86%
Prob. of Max Loss = 34.02%
Break-even @ $54.49
Entry by overbought status + indication of correction/mean reversion analysis.
Expecting pullback to moving average (VWMA) before earnings report in Feb.'18 for profit on weakening uptrend as seen in...
66/61 Put Vertical Credit Spread @ $1.82
Prob. of Max Profit = 4.90%
Prob. of Max Loss = 29.12%
Break-even @ $64.18
Straight up hedge against technology sector/semiconductor industry (NVDA + AMAT long put credit spread positions - both are linked below).
Feb.'18 expiration chosen to focus on Feb.'18 earnings reports for...
I don't like debit spreads, but sometimes they give a nice risk reward, SPY have a Implied volatility rank of 1.4 at the time of this trade. This is basically a 50/50 trade but we are risking less than the potential max profit.
Buy 242 Put
Sell 240 Put
Paid 0.65 per contract
I did 10 contracts so the max profit is $1,350 and my max loss is $650. ...
Directional play on IWM. With an implied volatility rank of below 10 I decided to buy some options (Yuck!)
I am basically betting that the price will go down below $137 in the next 35 days enough for us to take some profits. The good thing about this trade is that we have basically a 50/50 chance to make money (48% probability), but we have a nice Reward Risk...
Still anticipating ranging markets. Opened a couple Bear/Credit Call Spread at $211/$216. I'm using a $5 spread because the R/R is better than $10 spread.
Credit = $2.25 (net $2.14)
Break even = $213.14
* I likely will not hold on till expiration. I would use a SPY price drop to take profits and remove the risk.
I don't do many of these, but since price is in my "sell area" and implied volatility isn't good for a credit spread, I'm doing a debit spread ... .
Probability of Profit: 55%
Max Profit: $221/contract
Max Loss/Buying Power Effect: $179/contract
Break Evens: 208.21
Notes: I'll look to take this off at 50% max profit ... .
Let me start off first my showing you the metrics for the posted setup. It's a May 20th SPX 1880/1900 long put vertical:
Probability of Profit: 7%
Max Profit: $1849/contract (if price finishes below 1898.47)
Max Loss/Buying Power Effect: $151
Well, that just plain sucks. The probability of profit is a mere 7%. How am I possibly going to make any money on that...
I don't frequently put on debit spreads, but here's an instrument in which I have a fairly firm directional bias and which, additionally, has extremely low implied volatility at this point in time, making it ideal for either a calendar or a diagonal, both of which benefit from expansions in volatility (which will occur in the instrument assuming further weakness...
Spy Weeklys In the Money,At the Money or Out of the Money? What strike price is the best to trade for max bang for the buck? First you have to get the direction right and assuming you did that next you have to decide which strike price is the best to play for max profit in a short time period. Attached is a chart that shows the SPY trades we followed over 2 weeks...
I virtually never short a VIX product. I am, after all, largely a premium seller and, as such, am already short volatility in the vast majority of my setups. So, by shorting a VIX product, I'd basically be "piling on" to what I already do. I also virtually never do debit spreads ... .
However, with FOMC next week, I thought I would at least consider taking a...
Frankly, I don't use debit spreads very often, since they require a certain degree of directional certainty which I ordinarily do not have. Additionally, they are not high probability plays in the vast majority of cases.
However, I have a certain degree of certainty that volatility will increase from here and, ironically, the volatility in volatility is quite...