Volatility is Not ‘At the Lows’
- Posted by Greg Harmon
- on August 8th, 2012
The Volatility Index, $VIX, has remained low over the last 6 months with only a short pop up to 28 during May. Now it is back at support for the last 5 years around 15.67. Is it time to buy $VIX Calls? Not so fast. Take a look at the weekly chart below. Yes it has been the a solid floor, but look to the left. For nearly 3 years between 2004 and 2007 the $VIX stayed below the current level nearly the entire time. Any move below where it currently stands, at support at 15.67, will likely bring out the bears and naysayers who think that it is time for a correction lower in stocks and for volatility to pop. But now you know better. Just like an oversold stock that can stay oversold forever, it can still go a lot lower, and stay there. If it gets down to 10, then maybe you can start to get comfortable front running a reversal.
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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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