Superior Trading Skills through Education

Volatility - Vix - wow! Print
Written by Site admin   
Tuesday, 13 February 2018 14:19

Well that was an exiting few days as the Vix broke out....

The US dollar is fighting back as top dog, stock markets swoon and the VIX, CBOE volatility index rocketed from its old ceiling of 15 up to 50+ then back down to 25! Is this the big one?

Some stock traders have been puzzled and craving volatility, incredulous that the S&P kept climbing almost day after day for months. No one was selling. The market would only go up, despite the Feds raising interest rates and telling us QE was history.

The best game in town was to keep buying stocks and sell volatility by shorting the VIX with the XIV. The XIV is a nice little, inverse contract, that allowed option sellers a sure thing - it soon became a one way bet - and then it didn't.

Last week it was trading at around 140, today, 6 and untradeable. Blown away, taking with it a variety of gunslinger traders and a few hedge funds with plenty of other people's money.

There's an old saying: "The trading Gods must be satisfied". It refers to that aspect of trading psychology when hubris takes over. Arrogance and certainty of the future is so often displayed by newbies and those sucked in by a good story.

By some primeval law, the saying "Pride comes before fall" applies and the markets surely knock those traders' accounts down to size. Those who have been most arrogant and certain of the future become forced to make the biggest sacrifices to the trading Gods.


From the blog

Is this a scam?

Is this a scam?

Do you receive cold calls from 'brokers', binary offers and the latest alternative investment? I do, frequently. Once our name is on a share register or a broker leaves taking client information to his next billet, we are seen as fair game.

It used to be Land Banking until the scammers were run out of town. Alternative investments - are still on very fertile ground. The frequency of calls I get has slowed a little but rarely a week goes by without three or four calls that usually start with: "I recently sent you some information...."

My latest call was a little different.

Dan from New York Law Specialists (NYLS) called.


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