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Created on: 1/17/2021 5:01:31 PM Last Update: 1/17/2021 5:29:10 PM Posted by: RTT
WARNING: This entry is 528 days old. It may contain broken links, out-dated or misleading content. Please read on with caution.
1 POST
Why did selling SP500 volatility trades blow up?
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 Many have made their fortunes selling volatility premium and then losing it, that is because they are running down the lit fuse and not understanding that eventually the strategy blows up.
In the chart below periods marked with A, B, C, D are periods of chasing yield which was so great the selling of option premium became vogue. Yes, this strategy worked for a while and 'this time was different' worked, until it didn't.
Selling volatility work great during period gray A until the cycle ended at red A.
Selling volatility work great during period gray B until the cycle ended at red B.
Selling volatility work great during period gray C until the cycle ended at blue C.
Selling volatility work great during period gray D until the cycle ended at blue D.
The point is if you play the selling volatility game, know thy cycle. Cycles matter!. The dominate cycles below gave you plenty of time to go to side lines when risk became apparent.
NOW >>What is interesting is gray E, VIX is above 20, and the red cycle is rising with the blue cycle is pending a swing up which suggest we are in a pending crisis moment (deflation shock).
IDEA: Have cycles studies in you investing plans, mix them with sentiment and market fundamentals.
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NOTE: Posts here are the lite version, more depth on each subject can be found via our RTT Plus membership.
Changes in the world is the source of all market moves, to catch and ride the change we believe a combination
of Gann Angles,
Cycles,
Wyckoff and
Ney logic
is the best way to ride the change, after all these methods have been used successfully for 70+ years.
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Investing Quote...
.."[Point and] figure charts are more valuable than vertical [bar] charts"..
Richard D Wyckoff
.."It's easier to fool people than convince them that they have been fooled"..
Mark Twain
.."Just because you’re taught that something’s right and everyone believes it’s right, it don’t make it right."..
Mark Twain
.."When a dictatorship is a fact. Revolution becomes a right"..
Victor Hugo
.."So you think money is the root of all evil? Have you ever asked what is the root of money? Money is a tool of exchange, which can't exist unless there are goods produced and men are able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value(...) Money is made possible only by the men who produce. Is this what you consider evil?"..
Ayn Rand
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