The VIX is back at unsustainable levels, which means that at some stage it has to drop back down below 20.
This is definite due to the nature of VIX but the timing cannot be predicted.
Headline that caught my attention today: Nasdaq heads for worst month since 2008.
That's pretty serious.
However, if someone jumps into the market when everything is a mess than they will most likely come out as massive winners over a period of time. But how long is that 'period of time'? That's a good question but if anyone told you that you could double your money in 5 years with no effort then I would say: go for it.
What's my trade for today?
#DIS ( #Disney ): Earnings is coming up on May 11 after close but it has already dropped so much that I feel it's safe to try our luck with a bullish trade. I sold a May $95 put, which is about $7 below the expected move (9.91) plus I bought a 112/114 call vertical (bought $112 and sold $114).
If this works out then at expiry this trade will produce $195, which is awesome considering that it requires just over $1042 bp. If it doesn't work out then it would mean that the stock has fallen to multi-year low and it will only be the matter of time before it recovers. So I am happy to take the risk.
DIS Monthly Chart
Trade Type: Custom
Strike: $95p (sell) / 112c (buy) / 114c (sell)
Expiry: 20 May
IV Rank: 97.7
Cap Req: $1043
Annualised Prof at Expiry: -8%
Due to the overall weakness of the market I had to roll down a few calls.
It's certainly worth tracking these as each of these trades are working against me so they provide great learning experience: