Then you might want to take advantage of these swings. In an earlier post this summer I described what I believed to be the coming storm of wide up and down fluctuations in the DOW as uncertainty in the market ensued.
I described this fluctuation as being 300-400 point swings B4 a more steady decline in the market begins. Hmmm
Regardless of the final outcome(2008 or not), a way I have been making a few extra thousand here and there is to be a buyer in the opposite direction of the SPY at close on these crazy days..LIKE TODAY!!
So, I was buying calls at the close on the SPY today for pennies(few hundred dollars) in order to multiply those pennies when the market takes off as folks see their favorite securities "For Sale".
When the market closes way up 300-500 points be a buyer of puts on the SPY for pennies and enjoy the cratering the next day. This is a rare opportunity when VIX is 43.00!!. When was the last time you saw that??
So far I have made a few thousand dollars with my SPY puts. Sold more today. That was a $200 investment.
Spent $110 today. If I lose it, too bad. I think it is a cheap bet(and that is what all of this is, after all,...educated betting)
Good luck and Your Thoughts??
I look for the most leverage at the lowest price...sounds reasonable :-) but not always intuitive...
I was buying 12JanSPY151Call's for 9 cents and SeptSPY 134Calls for 10 cents. Cheap date!..I am the only one who bought those today as you see my 100 for the Jan and 50 for the Sept. I am lonely ;-)
Excellent strategy Reits - we were just talking about the same play this morning at breakfast. (The family that invests together, stays together)
do you think the same play can be used on other exchanges besides the S&P?
The volatility index (^VIX) is throwing ink off the chart right not.
I was thinking of shorting one of the indices that purport to track the it (VXX, VIXY, VXZ, etc.) but they're so abysmal at actually tracking it that it's impossible to get any confidence that it will go down when the ^VIX starts to.
Maybe I'll throw a small slice at it and see what spores it sprouts.
I have tried to work a strategy on VIX options, but here is the rub. It looks like you just buy some OTM puts and watch the VIX climb down from the ceiling and Voila, instant double rainbow!
The premiums for the strikes are very much tied to the intrinsic volatility of this vehicle more so than any other I track. Therefore as the VIX decreases to recent historical values(20's)the premium decreases quite dramatically for the puts in relation to delta when the VIX is higher from that exact phenomenon(decreasing volatility). Kind of a catch 22, but it does make sense.
I still like SPY and will be looking for more on the open.
Looks like you can buy calls & puts on the pure ^vix...not sure why the listing does not trade shares, yet the options seem to be available!?
One could have made some nice $$ on near the money August calls since the S&P downgrade-at least every other day, as the rollercoaster ride goes up & down.
Wow. I am surprised at the attacks. Thanks for the suggestion. I will definitely look into it.
I am also thinking about buying some GLD calls. As long as the price of gold keeps going up, it looks like a great way to make some easy money. Any thoughts?
More trading please. Hold if you like, but it is not the small time traders on this board that is creating your volatility. It is program trading. I love it. Buy when it is down, sell when it is up. Why would you wish anyone to lose? Good luck, but why would you read a board that includes trader. Find an investment club or something.