Trading Financial markets : VIX

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Euler
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Fri Feb 09, 2018 4:07 pm

Y, I can see that.

I think the modern media no longer produces news, just click and share bait. There is so little real analysis and debate and it's difficult to know what is real any longer.

But in that, I see a lot of opportunities. People seem to be herding more than ever in every market I look it. I sort of thought that was dead and buried but I think in this post-factual world it's on the rise again.

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Euler
Posts: 15096
Joined: Wed Nov 10, 2010 1:39 pm
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Fri Feb 09, 2018 4:09 pm

I think it's interesting that so many have got into trouble by effectively being on the short side of VIX when it's been at historically low levels. Seemed completely mad to me. Crisis appears from nowhere, it doesn't give a warning signal its sudden and swift so I've been happy to have been positioned to benefit from a spike up. Just didn't think it would be so large.

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marksmeets302
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Joined: Thu Dec 10, 2009 4:37 pm

Sat Feb 10, 2018 11:22 am

I agree, it's like these people never listened to Ed Thorp :-) It's very important to avoid a game over scenario.

The CBOE did calculations on the option pricing on black Monday, 1987. The VIX would then, if calculated in the same way as today, have hit a record of 172! Of course that's a completely insane number. It would mean that the annual implied volatility would be 172%, or a daily volatility of around 10.8%! But just because it's insane and will probably never be realized doesn't mean the number can't get up there.

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