The stock market's fear gauge, VIX, has been elevated in recent days, as stocks bounce around in a series of noteworthy moves. But it appears some traders are preparing for mellower days. The WSJ announced a trade yesterday, one of the largest of the day, one investor bought heavily on put options on VIX. This was a very very large bet. In the meantime the market maneuvered well for us. We showed several Advanced Mentoring students today exactly how we traded, and many others did, as the volatility was perfect for a fast profit to the call.
1. Futures we watched pre-market and were "mixed." I placed an order for 7.00, one dollar less than prior day close. I could have held for 6.25, the 33% low, but felt the market might turn.
2. I immediately placed an order to sell, at a limit, for the day at 8.00, and sold within 30 minutes.
3. Many traders reported doing this with ITM February issues also, as it is not the option that is the signal but the count or bias that is.
Remember, I day traded that call, but it's still to some (that are not day trading) an open position.
Learning to trade well with us is to recognize we offer a variety of methods around the same system for all types of traders from our brokers, to individual investors.
"If the trader has a negative view on the market he may be short equities and may be using these contracts to protect himself against a slow market rebound."
The downside has not been proven. We'll list a call for the euphoric that see a rise to 10,400
"Whatever method you use to pick stocks...., your ultimate success or failure will depend on your ability to ignore the worries of the world so long enough to allow your investments to succeed. It isn't the head but the stomach that determines the fate of the stockpicker." - Peter Lynch
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