Here we go again. The VIX (market fear gauge) came down to 26, which is still very high compared to the 15, where the mean is, but obviously much lower than the 35. I have a feeling that within a week we will see it going back up again.
What has been triggering the cyclical spikes was the Fed interest rate announcements. Every month the Fed makes an announcement, the market realises that we have a very high inflation. But then the VIX drops as the market gets used to and adapts to the current market conditions, so the fear gauge goes down.
Note: the VIX is mean reverting to about 15 so if it goes up high then it must come back down and eventually go below 15.
So what's my trade for today?
#TGT (#Target). It was absolutely smashed after the last earnings so the IVR is understandably very high approaching the next earnings, which is before market open on 17/08. Hopefully I can close this position before the earnings. I opted in for a 1 SD (Standard Deviation) strangle.
The stats
Trade Type: Short Strangle
Strike: $120 / 175
Expiry: 19 Aug
Delta: -4
IV Rank: 87.9
Premium: $3.18
Cap Req: $1500
Annualised Prof at Expiry: 180%
IMPORTANT: Studying previous trades provide the opportunity to everyone to learn a great deal so I encourage you to click on the links below and digest the info.
https://www.tycoonitos.com/community/market-comments/market-comments-20220624
https://www.tycoonitos.com/community/market-comments/market-comments-20220628
https://www.tycoonitos.com/community/market-comments/market-comments-20220701
https://www.tycoonitos.com/community/market-comments/market-comments-20220524
https://www.tycoonitos.com/community/market-comments/market-comments-20220419
Let me know what you think.
Nice winner!
Closed at $2.32 for an annualised profit of 190%.