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.
Trade Type: Short Strangle
Strike: $120 / 175
Expiry: 19 Aug
IV Rank: 87.9
Cap Req: $1500
Annualised Prof at Expiry: 180%
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