The VIX or more specifically $VIX.X is the ticker symbol for the Chicago Board Options Exchange’s or CBOE Volatility Index based on S&P 500 index options. I’ve watched it closely over the past several months and I have noticed that it has crossed 16 as well as 21 multiple times. Today, I got one right . . . having acquired 10 contracts of the July 21, 2021 CALLs with a strike price of 25 as high as $.63 and as low as $.20 selling them all at $.85. With this transaction I cleared 214% but more importantly learned a couple of valuable lessons!
- Study before you LEAP (excuse the pun) is much like doing your homework before a test in grammar school. It can’t hurt and is likely to improve your test scores.
- Greed is the enemy. Sure, I more than doubled my money, but I left lots of money on the table and could have scored a 4X and this is key as greed can make you miss the boat. Therefore, pick a place to buy and a place to sell before you invest and not being too greedy will end up being your friend.
UPDATE . . . I’ve repeated this strategy three more times and am now four-for-four and here are the details.
TRADE #2 – August 11, 2021 acquired 3 contracts of the VIX September 15 CALLs Strike Price 25 for $1.70 and sold them on August 19th for $2.30 clearing 133%.
TRADE #3 – September 2, 2021 acquired 10 contracts of the VIX September 29 CALLs Strike Price 25 for $1.18 and sold them on September 20th for $2.20 clearing 183%.
TRADE #4 – Acquired 50 contracts of the November 17th CALLs Strike Price 25 for a variety of prices starting at $1.10 then $.45 then $.30 totaling $2,567.78 and sold them all on 11-9-21 for $2,958.53 and clearing an 115%.
UPDATE . . . I’m rebranding this strategy to the VIX 16 to 21 Plus Strategy as I’ve left money on the table with recent spikes in the VIX.
RISK – Trading options may result in potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the options markets. Do NOT trade with money you can’t afford to lose.