According to VIX, investor fear levels are hitting lows not seen since 2006. I remember that market phase like it was yesterday. There was never a time in my career I had grown more fond of trading and fond of the market in general.
I’ll keep this brief, as there’s only one detail you need to remember about a VIX heading to new relative lows.
The VIX bottomed in 2006. The market topped in 2007.
What took place between those two reference points were opportunities that changed my life. Don’t miss what’s coming until you know the top is really, really, really in this time.
OA
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Whenever someone says “VIX hasn’t been this low since ________” that person is implicitly comparing an uptrending VIX to a downtrending VIX. Comparing a market of rising fear to one of falling fear. Apples to oranges.
Also, the VIX calculation has changed many times. Now that it’s calculated off of a combination of weeklies, if we truly see 2006 style low vol for an extended period of time, we should test all time lows, which are 8.89.
More recently, it looks like shorting event risk vol after the event takes place is officially over. It was a good run, but ETP’s are making VIX way more gappy. Which makes sense. You shouldn’t be able to profitably short vol via ETP’s after the event is over if you can’t do it in the options market.
Following up on the SNAP trade I posted here a couple of weeks ago. Bought some May calls when stock was 21 on the dot. Sold with stock at 23.40 for a nice 105% gain. Caught the nice pre-earnings pop I was hoping for, so had to book it.
LOL. Review those comments, you said you needed to wait for earnings.
So in other words, your earlier disagreement about this being a good long at $19 was totally fucking stupid. Please remove it from my archives.
I bought for a quick flip to specifically play the earnings release date. It has nothing to do with your incorrect call that it would follow the TWTR pattern and race to new highs in a short time-frame. I disagreed and said the only chance it has at challenging the highs is if it turns in a stellar 1st earnings report this month (May). I dont know if that will happen or not, but that was my point if you really want to rehash all this. I like your blog posts, but youre kind of dense and somewhat of a jerk.
Wasn’t expecting it to jump very much pre-earnings. But since it did, decided to sell. Would have held had it still been down at 21 or below.
Hold the fuck on…
I presented this idea a lot cheaper than you, and encouraged folks to sell the first round a lot higher than you.
You told me it was a bad idea.
You paid more than me, earned less than me…and gave me an opinion that I was wrong?
I’m not dense, I was SUPER fucking smarter than you were and got some additional flack from you, free of charge. Yet you go on to make the same trade, just put it together worse.
The fuck?
Man I have no interest in rehashing this with you and your selective memory. Your followers who ended up with a bunch of worthless options can vouch for how things went down.
Lol, we had a discussion about you in my trading room today. Everyone saw your comments and I’m not the only person over here laughing and saying “WTf?”
Great analysis bro.
If the markets rallied big on GOP controlling WH, Senate, and House what will happen if that control is cracked in 2018? Adios $SPY. In the meantime, let’s party on.
That’s sort of like making a comment in a sports betting blog about what might happen when a team’s star player is going to need to be re-signed in 2 years. Who cares for our purposes?
If you haven’t done so already, do yourself a favor and start following @TruthGundlach
Apparently it’s real. What a start!
2005 and 2006 were 2 of the best years. The party was literally the fuck on. Especially in south FL. Housing market on fire. Stocks up. The malls and the restaurants were packed on Friday and Saturday nights. Texas Hold ‘Em Poker craze. Shaq and Wade winning that championship with the Heat. The credit card companies with those 0% interest, no fee balance transfers…..I remember taking out max loans in credit cards and sticking them in local bank CD’s paying 5-6%. Making money off the vig like a gangster.
baby Harambe alive and well too.
Harambe loved the Heat.
So I gather by this post, stay long. Very long. Haha
love the last paragraph. any trade stand out in particular?
test
FYI tech guy …can’t see comments on OA’s blog about half the time. Seems to prefer Firefox over Chrome. Other 1BC blogs seem OK.
i was having the same problem yesterday on OA’s blog
The blog posts don’t show up in my feed reader anymore either.
Oh man, OA. My snout is tingling.
Reversing a 15% move in 2 hours is the type of thing that makes me want to give up on this particular form of torture. $ICON.
can you tell time frame, what month did vix bottom in 2006, what month did market top 2007 ? and do you think it even matters,.. ?
thx
Late 06, late summer/fall of 07. Many things didn’t top til 08.
Point being, the low VIX isn’t a signal.