Horse Racing Forum - PaceAdvantage.Com - Horse Racing Message Board

Go Back   Horse Racing Forum - PaceAdvantage.Com - Horse Racing Message Board


View Single Post
Old 03-01-2017, 01:08 PM   #3
Parkview_Pirate
Registered User
 
Parkview_Pirate's Avatar
 
Join Date: Jan 2015
Posts: 1,951
Nice analysis, Barn. I got caught on the wrong side of a futures trade during the August 2015 spike, trying to catch a falling knife as the market plunged. But I had faith (and enough margin) to ride it out, and made a nice profit when the market bounced back over the next couple of days. Like you say, the timeframe for taking advantage of the spikes is quite short, and requires nerves of steel to make the trade.

IMHO, when volatility spikes, it provides a rare opportunity to sell options. I was able to make a small profit on some covered calls I sold about six years ago during a market spike upwards, and the volatility dropped off shortly afterwards. My trade was made on the downside of the volatility move, and was relatively safe, making a 20% profit or so when buying back the calls after four days. When the market is more stable, I tend to stay away from options, as the theta and vega eat you alive.

If the talking heads of the market have any credibility, the middle of March should provide some excitement as budget and debt ceiling deadlines take hold in Congress. While these issues may provide a catalyst for a spike in volatility, I'm leaning towards a more permanent change to higher volatility over the next couple of years versus short term (2-3 days) spikes. I see the VIX having an average range of 18-20 as the markets decline 20-40%, though when the decline starts - and what triggers it - is still unclear to me.

One thing I still don't understand about volatility is that the upward moves in the market aren't reflected nearly as much (and sometimes never) by a higher value in the VIX. Today is a good example - with the S&P up over 30 points, the VIX has stayed near 13. If the S&P had dropped 30 points, the VIX would be up near 18 or 20...
Parkview_Pirate is offline   Reply With Quote Reply
 
» Advertisement
Powered by vBadvanced CMPS v3.2.3

All times are GMT -4. The time now is 09:16 AM.


Powered by vBulletin® Version 3.8.9
Copyright ©2000 - 2024, vBulletin Solutions, Inc.
Copyright 1999 - 2023 -- PaceAdvantage.Com -- All Rights Reserved
We are a participant in the Amazon Services LLC Associates Program, an affiliate advertising program
designed to provide a means for us to earn fees by linking to Amazon.com and affiliated sites.