NEW DIRECTIONAL CALL PLAYS
CBOE Market Volatility Index - VIX - close: 17.59 change: -0.06
Stop Loss: N/A
Target(s): 24.00, 28.00
Current Option Gain/Loss: + 0.0%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below
The CBOE Volatility IndexÂ® (VIXÂ®) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. Since its introduction in 1993, VIX has been considered by many to be the world's premier barometer of investor sentiment and market volatility. (source: company press release or website)
Why We Like It:
The VIX has been trending lower for months but the "fear" index has fallen toward multi-year lows. Odds are growing that we're going to see some sort of event or correction in the stock market that will push this index higher. I want to try and capture this drop in stocks with calls on the VIX. I'm suggesting the March $22.50 calls.
No one is expecting the Federal Reserve to make any changes in their policy on Wednesday but just in case they do I wanted to open positions in the VIX before their announcement Wednesday afternoon.
Officially we're listing this play without a stop loss but more conservative traders may want to consider a stop loss under the recent lows near $15.30. We have two targets to take profits at 24.00 and at 28.00.
Open positions now
- Suggested Positions -
Buy the 2011 March $22.50 calls (VIX1116C22.5) current ask $1.70
Entry on January 26th at $ xx.xx
Earnings Date --/--/--
Average Daily Volume =
Listed on January 25th, 2010