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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: Teresa Lo who wrote (10805)	5/15/1999 6:43:00 PM
From: stockycd	Read Replies (1) \| Respond to of 14162

IS.com, When the VIX rises, the market is usually selling off and vise versa. As the VIX rises, OEX implied volatility rises and hence OEX put premiums rise, so it cost more to insure yourself by buying puts. When I started paper trading OEX calls and puts, I hadn't factored in the VIX. One day, I almost fell out of my chair, when the VIX tanked only to find that my puts had depreciated much more than I expected. You can gauge implied volatility for issues other than the OEX by using the VIX but it is only useful if the stock or index you are working is moving as far and as fast as the OEX. You can take this one step further in that as the VIX decreases, and the OEX moves forward, there is a slow down in the appreciation of OEX calls. Once the VIX stabilizes, the OEX calls will move at a faster rate. Simply "put" the VIX is the easy to find, ready to use, implied volatility measure for the OEX that we all wish we had for every equity or index option we've ever traded. Personally, I like doing business much better when the VIX is low. Did I make sense? Any thoughts? Chris Chris

To: Teresa Lo who wrote (10805)	5/16/1999 5:49:00 PM
From: Herm	Read Replies (1) \| Respond to of 14162

Hi Forrest, I have noticed that the when VIX drops below a reading of 25 the market goes into a correction. So, when the VIX dropped to around 17 last August 1998, the market took that nose dive correction until October 1998. At the worse point of that correction the VIX reached a sky high reading of +45. Everyone was getting a nose bleed. That was the market bottom and the start of another leg of a bull run. In short, it would appear that selling CCs during low VIXs readings will cushion give backs to the equity markets. Also, buying sideshow PUTs or shorting the stock against the box before the dumps would hedge more so.