Who Benefits from Volatility?

[al_bundy]

everyone got used to 30 VIX being high and 45 being a once a decade event. no one was ready for a sustained 50+ VIX month which probably hasn't been seen since 1929 or 1973

 

[d]

don't think vix was around in '29 ...

 

[ERD50]

The option premium have been absolutely crazy the last few weeks. When Apple was trading around $90 last Thursday the premium for Apple Oct 80 put was $2.75. That is a heck of a lot of money to pay for betting the stock will drop more than 12% in 6 days.

This Monday, I sold November 140 calls against my AAPL, for $1.85.

Apple was trading right ~ $104. So people are willing to put up money that Apple will jump 36% in 6 weeks, when it has already come up from the 80's.

Interesting times. -ERD50

 

[audreyh1]

don't think vix was around in '29 ...

I think people have been backcalculating the VIX since we started seeing historic numbers last week.

Audrey

 

[al_bundy]

This Monday, I sold November 140 calls against my AAPL, for $1.85.

Apple was trading right ~ $104. So people are willing to put up money that Apple will jump 36% in 6 weeks, when it has already come up from the 80's.

Interesting times. -ERD50

a lot of people trade on Elliott Wave and the way the charts are, they are predicting a rally that will take the SP as high as the 1200-1300, Dow 11500, and forgot for the nasdaq but i think it's around 2200. after that we are supposed to get another crash next year with the lows being whatever you want to make up. you can make a case for the SP500 bottoming out anywhere from 850 - 600 next year and lower by 2012.

i think the exact sequence is supposed to be a rally tomorrow turning into another downleg that will take us just below last friday's lows and then a rally

 

[NW-Bound]

i think the exact sequence is supposed to be a rally tomorrow turning into another downleg that will take us just below last friday's lows and then a rally

Sure sounds like "tradeable" info

Should I put all of my 67% cash portion to work?

BTW, it was 50% in July, when I first joined this forum and have not made much trading since.

 

[al_bundy]

you want anything more specific it's $75 a month

to bad i got in after the monster friday rally, the newsletter predicted it and they said the profits were enough to pay for 11 years of subscriptions

one of my sell orders i put in this morning just got executed, waiting for the others to lock in some profit and get ready to go short

 

[FIRE'd@51]

Who'da thought a couple of months ago that the price of a barrel of oil would be below the VIX?

 

[ERD50]

you want anything more specific it's $75 a month

to bad i got in after the monster friday rally, the newsletter predicted it and they said the profits were enough to pay for 11 years of subscriptions

and what do they tell subscribers when a trade goes the wrong way?

-ERD50

 

[al_bundy]

that's when you have stops to sell usually between 5% and 7% loss max. if you protect your money like that then you can make a nice profit even if most trades are money losers

 

[ERD50]

that's when you have stops to sell usually between 5% and 7% loss max. if you protect your money like that then you can make a nice profit even if most trades are money losers

you can take an awful lot of 5% and 7% stop losses, and watch that stock climb right back up after you got stopped out. I think stop losses do more harm than good, and are ZERO protection against an overnight gap.

AAPL once dropped in half, after the close and before you could trade it.

I'll give my normal litmus test. Any mutual funds using this Elliot Wave and stop-loss technique over a long time frame that are making exceptional returns, risk adjusted relative to something like a SPY ETF (or index of similar volatility)?

I'm always looking. But, if it isn't repeatable and reproducible, it really isn't a 'technique'.

-ERD50

 

[al_bundy]

you can do this as an individual investor, but most mutual funds can't do this except for long term strategies since it takes them months to get in and out of their positions

 

[Gone4Good]

The traders benefit the most..........

Those that somehow manage not to blow themselves up, that is.

 

[ERD50]

you can do this as an individual investor, but most mutual funds can't do this except for long term strategies since it takes them months to get in and out of their positions

OK, so I'd like to see 100 individual traders try this. Compare their performance after a couple bull/bear cycles. I'd like to see if their risk-adjusted performance beat an index.

Systems like this are always subject to survivorship bias. The only ones you hear from after a few years are the few that succeeded - but how many failed along the way?

Color me skeptical, but always interested in being proven wrong.

-ERD50

 

[al_bundy]

go to safehaven.com and look up JOseph Russo's newsletters. or just google him since he gives out free versions to a lot of websites.

his website is www.elliottwavetechnology.com