With the recent selloff – and now with today’s bearish gap down — the elevated volatility levels in the market (Implied Volatility Rank of the VIX (Volatility Index) is at yearly highs) favors shorting overpriced options (with the charts as always) and/or trades with positive time decay. This should set up some great short-term bull put spread candidates – whether on stabilization in SPY or, preferred, if we get further market weakness to the downside in the already oversold broader markets.
Below are charts of SPY/VXX. With this spiked volatility, once we get a reversal or stabilization in the SPY, this favors shorting overpriced call options on Volatility ETFs (we prefer using VXX and UVXY), and OTM put spreads in SPY or other Index ETFs.
We will advise of entry via text in Telegram.
If you want to learn how to profit from these strategies during mini-crashes – with a defined, successful edge, you need to take Master Trader’s Ultimate Guide to Trading Volatility ETFs and Options now.
Get a taste of these strategies on our Video here: Profit from Volatility Spikes After Market Selloffs
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Happy trading! If you have any questions or comments, please e-mail Greg Capra at Greg@mastertrader.com or Dan Gibby at Dan@mastertrader.com
All the best,
Greg Capra
Managing Director of Master Trader
Trading the Pristine Method — Origin and End
Dan Gibby
Chief Options Strategist
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