To: LemurHouse who wrote (9872 ) 3/7/2001 7:46:29 AM From: Poet Read Replies (2) | Respond to Hi Andrew,general indicators of turns in their respective indices. There's a saying that "when the VIX is low, it's time to go, when the VIX is high, it's time to buy". High VIX and VXN numbers generally signify market bottoms, which are marked by great volatility. What is "high enough" is subject to interpretation, particularly with regard to the VXN, which is a new measure.both puts and calls are inflated. It's not a great time to buy them, because you'll be paying a high price. What may happen is something referred to as a "volatility implosion" if the stock price begins to calm, the IV dwindles and the premium of the option you're holding will deflate, even though the underlying is not moving much.sell premium, ie, sell naked puts on issues they think will rise, sell naked calls on issues they think will fall (which is extremely risky), and sell calls against stocks they own (a/k/a writing covered calls). In this way, the premium seller has the market working for him or her in three ways: you are trading in the general direction of the market, you areprofiting from the natural decay in time value of the option as you near expiry,and you are profiting from the deflation in volatility.
