Here is another quick post about trading the VIX using history and a conservative approach.
Take a look below at the graph below with the VIX actual performance from this past year. Trading between 16-21 and betting on a strike price of $25 with a DTE of 45 on some of these moved resulted in some excellent quick returns.
Moving forward, we’ll consider last years’ actual, and still use a 16-21 trading range as well as buying an options call at a $25 strike price with a 45 DTE. With this latest strategy, we will make fewer trades (about a half-dozen or so) for one-way call trades. We’re also hoping to get one or more spikes over 30 where mean reversion would suggest buying the put at around a strike price of $18 for the ride on the way back down to its’ normal range. Our prediction moving forward for this next year is conservatively based on current conditions while paying attention the past 12 months of history. FINGERS CROSSED!
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.
