The VIX has been contracting over the past 3 days so hopefully this trend will continue and it won't stop till 18.
Why is this important?
Because for option traders the volatility is critical. When the volatility is high then the options are expensive. At the moment many of the premium sellers (option sellers) are in the negative for the year because many of us sold options when the volatility was much lower thus the premium we received was also much lower than what we would be getting for the same positions at the moment.
The below screenshot shows the daily correlation between the VIX and the SPY. We can see that normally when the SPY falls then the VIX jumps. So if we focus on the past 3 days then we can see that VIX dropped a fair bit from it's recent high while the SPY didn't move much, which might signal that the market selloff is over (at least in the short term).
The stock has been sliding down big time over the past week so I thought it's worth taking a risk with a March $67.5 put. Why March? Because it's earnings are coming out on March 29 and we should avoid it.
On the monthly chart we can see a very strong support around the $67.5 mark so I am comfortable taking a short term risk with this stock.