Market is extremely oversold & fear at a 2 year high as indicated by the VIX. The opportune moment o have shorted this wave has past and we could face a potential technical bounce while the S&P 500 holds above 1851 level. Caution adding into existing shorts or establishing a new one here.
It is truly a learning experience trying to trade volatility. Accumulated some UVXY calls on the cheap in September and for a few days this week, the calls were rising like a rocket. The opportune time to sell was really a few hours on Wednesday and a few minutes during the open on Thursday. By most of Thursday and Friday, the calls were way off the peaks established on Wednesday and Early Thursday. And looking at this chart, you can see that the extremes for VIX are mostly sharp peaks which drops off rapidly which probably makes sense as most market selloffs are rapid waterfall like!
Kazonomics
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The VIX is the implied Volatility of the SP500 options, it does not move like a stock nor should it be treated like one. More over it represents forward expectations of market fluctuations and can be interpreted as a gauge of fear in the market. Like all things the crowd buys the top which will be parabolic. The crowd has over paid for insurance on further market declines as usual buying ultra expensive puts at the bottom again....hence the VIX collapse today.
The Vix for the most has an inverse relationship with the SPX and should be viewed in tandem with the markets to have a better perspective of market outlook.
Will_Wong
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Thanks!
izzycalderisi
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16 year old chart still relevant as ever, vixonomics dropping the vol gems for 2 decades ..#MJOFTA
Kazonomics
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And there you have your short squeeze!
RobTaylorForex
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Do you think we are soon approaching round 2?
Kazonomics
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If anything we all should have learned about this bull wave....never try to call tops. Just follow its trend structure in this time frame and others and you will be able to see when each wave falters. Should it pull back far enough to jeopardize the longer-term structure that too will be evident if viewing the chart at the right resolution.
Will_Wong
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I missed the spike on October 15/16 and looks like I get another chance to profit from those UVXY options from back then.