ON POOR NFP'S, VIX ROTATES BACK BELOW 15 ON MARKET STRENGTH
As a premium seller, one of the instruments I constantly keep an eye on is VIX because, as I general matter, I don't like to sell 45 DTE premium in broad market instruments like SPY, IWM, QQQ, or DIA when VIX is below 15, opting instead to (a) sit on my hands; (b) sell premium in those underlyings farther out in time where implied volatility regularizes (>90 DTE); (c) look for plays in underlyings with higher implied volatility (e.g., earnings plays); or (d) look to enter long volatility instrument plays.
Naturally, I could also look to put on low volatility strategies like calendars or diagonals, but generally favor one of my other options for dealing with a general low volatility environment compared to throwing a low volatility strategy on, particularly if I've got a large number of, for example, SPY trades on in different expiries and at different strikes (I do) -- setups that I'd have to bob and weave around with something like a diagonal or a calendar where I'd be rolling an option, potentially into a strike that is part of another setup.
For the time being, I'm going to hand sit on putting on any additional SPY, IWM, QQQ, or DIA premium selling plays 45 DTE while VIX is sub 15 (I slapped on a SPY and an IWM iC earlier today before volatility dipped below 15); attempt to find earnings or other plays where the underlying has an implied volatility rank of 70 or greater and an implied volatility of greater than 50 (they've been enormously hard to come by of late); and look to enter another long VIX product setup if we revisit a price point below 13.
And -- if push comes to shove -- I'll consider putting on some >90 DTE setups if my unengaged buying power drops to 50% or below. After all, you can't experience theta decay unless you've got theta on ... .
Naturally, I could also look to put on low volatility strategies like calendars or diagonals, but generally favor one of my other options for dealing with a general low volatility environment compared to throwing a low volatility strategy on, particularly if I've got a large number of, for example, SPY trades on in different expiries and at different strikes (I do) -- setups that I'd have to bob and weave around with something like a diagonal or a calendar where I'd be rolling an option, potentially into a strike that is part of another setup.
For the time being, I'm going to hand sit on putting on any additional SPY, IWM, QQQ, or DIA premium selling plays 45 DTE while VIX is sub 15 (I slapped on a SPY and an IWM iC earlier today before volatility dipped below 15); attempt to find earnings or other plays where the underlying has an implied volatility rank of 70 or greater and an implied volatility of greater than 50 (they've been enormously hard to come by of late); and look to enter another long VIX product setup if we revisit a price point below 13.
And -- if push comes to shove -- I'll consider putting on some >90 DTE setups if my unengaged buying power drops to 50% or below. After all, you can't experience theta decay unless you've got theta on ... .
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