All: question on VIX strategy...
Looking at the chart of the VIX, and applying some of my favorite TA (which I'm not quite convinced will work on the VIX, but never mind...) I feel that it is about to turn.
What I am REALLY not convinced of, though, is the supposed inverse relationship between the VIX and major indices.
I note in looking at the historical chart, that the market seems as likely to rally from a VIX at this level as to tank.
Yes, the market highs and lows are correlated with VIX lows and highs. The problem, though, is determining just what is THE high or low for the VIX. The market seems to be able to rally from a low VIX, as long as it isn't THE low, and is able to tank from a high VIX, as long as it isn't THE high.
Problem is, I dunno any way to determine, in advance, what is THE high or low VIX, any more than I can tell what is THE high or low price of a stock or index. :)
I am interested in a strategy that will make money if the VIX increases, but is market neutral.
The most obvious I suppose is a straddle. Straddles are normally expensive, and usually avoided for that reason. If one wanted to buy a straddle, now would seem to be the time.
And if one IS convinced of the direction of the market (I'm not, though) now is the time to buy long calls or puts.
Any other strategies that would take advantage of an increse in the VIX?
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