The volatility index, traded by the CBOE, is often a good traders reference point to compare what is happening in the options market against the equities market. The rule is that when you see differences in the VIX or VXN and the equities indexes, something has to give ground.There are lots of good material to read about the VIX on the web (just creatively Google the Volatility Index), but there is a blog that I want to give a shout out to: http://vixandmore.blogspot.com/
The Vix and More, maintained by Bill Luby, often has me thinking about what it all means. His last post today (http://vixandmore.blogspot.com/2008/01/can-markets-bottom-without-vix-spike.html) discusses about whether the market can bottom without a VIX spike. This is something that perplexes traders and I am happy to see that Luby takes a crack at trying to explain it.
He may be wrong, but his research seems well thought out and I need to continue to think about how to apply his point.
Nice close today. I changed my mind and added to my AAPL calls a few minutes before close (Feb185's). I will sell some of this at open - I expect another round of enthusiasm in the morning that I want to sell into.
2 comments:
Thanks for the mention, sneak, and the superb photo pairing.
FWIW, I'm still trying to figure out what to do with the VIX, VXN and other volatility indicators too. Lately I've been paying more attention to put to call ratios (ISEE, etc.) and the TRIN, as the signals from the volatility gods have not been easy to decipher.
Excellent work on the blog, which I recently discovered and subscribe to via a feed.
Cheers,
-Bill
P.S. As an aside, you and I are both long AAPL calls at the moment.
The pleasure is mine Bill! Your welcome and thanks for commenting. Your blog is much more in-depth on the trends of the market than mine is and I learn something often
I am just a hack trying to make some "green" and share out what I am doing so that others can hopefully make less mistakes.
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