Hi,
I'm an infrequent poster, but I thought I'd share my thoughts as to why I changed my net exposure to short by buying some QQQ puts on August 28th. (I'm hoping this can give a technical perspective to my bearishness coming into this week)
The VIX (CBOE Volatility Index) was at an extreme low, coinciding (as it seems to do) with a protracted and tightening creep upwards of both the S&P 500 and the NASDAQ Composite. (perhaps other indexes too, these are the only two for which I printed acetates)
My interpretation of this is an increased complacency among market participants, and as the volatilities of the underlying stocks tighten up. Furthermore (weakly), it implies that options are "cheap".
From my studies it seems like an extremely low VIX (as we had before the weekend) leads to at least a moderate break in the market, and this coming into the fall dip, I felt buying some puts to mitigate my long exposure was prudent.
I'm sure despite this explanation, there was some use of The Force in my decision, but I do have some technical rationalizations for my actions!
Cheers,
Simon.
Edit: August 28th, sorry. |
