VX1! trade ideas
VIX V1/M1 @ 22.50 + 1 Tick 22.55 Confirms Index SELLThere is a large accumulation of VX Complex Instruments.
A warning sign of higher VX to follow.
And with the 10/20/50 in Positive Divergence, all signs
point to an initial 10% Correction followed by an additional
9% correction.
We anticipate the ES can trade below 3910 and overshoot to
the downside 3600-3800 range can trade on overshoot.
The Bigger Lick approaches, the Velocity will catch many by
surprise.
Participation requires strength.
VIX - Delta "Change" - 22.50 Level with Negative Roll YieldVIX will move higher as Indices will front run their .382s
Negative Roll Yields are always a warning, we alerted
traders to this Important Condition on Settlement as
V2/M2 exceeded V1/M1 by 8%.
22.50 is the level to watch for a breakout higher.
August is a Negative time for the Indices.
We maintain large Sell to Opens in AMZN, TSLA, TQQQ,
NQ, ES, RTY, MNQ, MES, M2K
We Bought to Open SQQQ & VVX.
We sold 11 SPDR ETFS with the larges Bias to Consumer
Discretionary as we indicated Demand has peaked. The
A50 is a clear warning sign as we indicated last week.
VIX - Time Decay for the VIX STR and HYPER BUBBLE EnteriesS&P VIX STR Index will continue roll to V2/M2 as the constant 30 Day rolling
Index weightings between V1/M1 & V2/M2.
As a consequence, 82% of the time the VX Futures see time decay close the
Roll Yield.
Roll Yield is calculated by the spread between V1/M! & V2/M2 as a percentage.
The average is roughly 8%, over this percentage an we see Price tend towards
a decay of Price through time into the next Rollover.
On April 19th CASH VIX Closed @ 22.50 - the VXQ closed @ 21.45
* A LARGE TELL: The Negative Roll Yield :)
The value of ETPs are all calculated from the 30 Day Constant.
All derivatives: VXX, UVXY, SVXY are calculated using this formula.
Price can change at any time, it is important to remember this - there is
a clear percentage of the time when the VIX can move far higher.
The trick is to determine when the probability favors this move.
VIX - Daily remain in a Sell, althoughThere is a great deal to be concerned about speaking broadly.
Price erased 35 days of gains quickly - the first warning.
Asia continues to absorb Dollars at a higher than usual rate.
We have a very Large Lick setting up in VX Complex, one that
will provide extremely large gains into August and through
October.
VXQ - 1975 1955 1935 1920 1895 are the levels to watch.
The draw is from the 2 prior Contract lows to highs. July
has broken its Long - 12.30 to 15.50 remain the entry zone,
unless we see signs of 18.60 providing support.
We believe it will.
VIX Cash to VIX M1Cash moving up ahead of Expiration next Tuesday/Wednesday into Settlement.
Approaching window for larger retracement 21-22 July.
Interesting times in VX Complex.
Tomorrow is OPEX, it is important to note that weekly patters for ES YM NQ have
been fairly consistent throughout Summer Trading.
2 patters have been trading
BID Sunday, Monday, Tuesday, Wednesday, Globex Bid Thursday into Sell through Friday.
SELL Sunday, - Monday, Tuesday, Wednesday - Pre-Market Glovex Bid into Friday Close.
July VX Futures Rollover: M1 / August M2 to August M1 Roll YieldJuly Protection for Volatility was taken up to Sell M1 as we begin to see M2 (August) uptake
100% of the VXX M1+M2.
Settlement will have, at minimum 98% front loaded into August M1.
There will be the ever present Gap to close as there is every month.
As the CASH VIX and July Contract converge for settlement, the Indices should range.
We are looking for 12.30s to 15.50 as the Buy to Open range, but will adjust as necessary
should the range fail.
We are in the middle of Summer with a number of important Events setting up. Anticipating
a large reaction to the undercurrent of RISKS.
The VX Complex is the primary guidance for our setups and positions.
We are approaching settlement - Thursday, Friday and the following Monday will provide a
clear Trend for the short term.
We anticipate a large decline in August through October.
A Trade Plan is required as there are enormous "what if's" ever-present.
VX Complex - Contango RemainsThe VX complex has targets at in the Range of 12.30 on the larger Daily.
A Compression Range remains 13.35 to 15.51, where Price can be volatile IntraDay.
The CASH VIX has put in 3 tests of Support @ 14.20.
The Volatility Complex is setting up a large move to 106.12 - it will likely come in steps, albeit rapidly.
VXQ is posted above, the Sept. 2021 CT.
The Algos will certainly attempt to confuse Traders around Roll/Settlement as there is always a Gap left as
M1 Future and CASH VIX Converge.
September is likely the Best month for positioning, the important position Sizing can be achieved using the Continuous Contract
for the VXM or Micro VX Contract. This affords traders the ability to spread in Ladders for safety and improved cost averaging.
The SPXU will provide excellent opportunities as well and should be timed for entry as M1 on the VX Futures begins to Roll Yield to M2.
Presently SPXU appears to be targeting 16.56 and then 15.83, ideally we would like to see 13.96 - this appears unlikely at the moment, but would be a indicative of an enormous Blow Off in the ES. It does not however correlate to the VX Front Month Futures Low Targets. It will depend on how quickly they convert Roll Yield.
Stay Frosty Traders, a very nice trade is setting up in Volatility.
Be Blessed.
14th, 15th and 16th - Magic days for VIX indexI just noticed that when the VIX index is traded on the 14th day of the month, if you open a long position near the close value you are almost guaranteed a very nice risk-reward ratio with a minimum drawdown. When VIX is not traded on 14th, this can happen on the 15th or 16th.
One of the Lowest Risk Trades Out There: VIX LongRegression channels are a very powerful tool for entry and exit points on assets. Unlike human-drawn lines and channels, they are not subject to biases and attempts to fit price behavior into questionable systems like Elliot's Wave.
I decided to use /VX (Current Continuous) rather than spot VIX since /VX is actually what's used to settle your options on VIX (as VIX itself cannot trade, although /VX can as a futures contract). VIX also does not have volume data while /VX does. You can also purchase /VX directly or its smaller cousin (/VXM) for about $1200 per Contract.
We've formed two touches on the bottom of the descending channel on bullish RSI divergence. The Money Flow Index also shows some kind of bullish divergence too (since /VX is a futures contract, volume-based indicators can be used). Regression channel theory likes to go long at the bottom of the channel and short at the top. I've done a few trades so far like this, and they've all gone somewhere. No trade is risk free, but unless you screw yourself with short-dated options, your odds of making money on this one have to be quite high.
SPY is also hitting the top of its own well-formed regression channel, which fits this trade quite nicely.
When VIX index shows the volatility is predictableLet's go back a decade and observe how the VIX index played out the 2007-2008 financial crisis and the market's recovery.
Previous to July 2007, the highest VIX value was $22.58 observed in June 2006 (minuscule compared to what comes next).
Then the crisis happened, and VIX became extremely volatile and created a new support level at $16.7. There is various observation here that should be treated as lessons from the past.
1. The market does not magically become stable. It takes time to stabilize the market, attract long term investors and build faith in the success of businesses again. On 29/Dec/2008 week, the VIX went from $47 to $30 which was a $17 drop. It was immediately realized that the market is not ready for a quick recovery and the price increased back sharply to the $57 level ($27 increase). However, the steady, slow drop is not rejected as sharp as previous. A slow price decrease from Mar 2009 to April 2010 (over a year) rejected sharply only at the previous support level.
2. When the support level is shifted or levelled up, it takes time to recover the support level. The VIX went through multiple rejections during a span of 6.6 years to recover the support level. It takes a really long time to bring the support back to the old (stable) level after a market crash.
3. Every time VIX hits the support, you get a golden opportunity to play long VIX with little to no risk. Every time the market hits the support, it goes up again. With a higher margin and tight stop loss, you could have made large profits using VIX.
4. Finally, the quiet period comes after 2013. Stocks are good, the market is predictable and VIX volatility is low.
5. In 2020, we see another market crash, VIX increase to $80.8. This is even higher than the highest of 2007-2008 which was $69.4. At the moment of this analysis, VIX just tested $19.8 and currently selling at $20.08. Mind that the market crash wash only a year ago.
I am not going to do the analysis on the 2020-2021 window but here are some questions for you.
1. Has the market recovered too soon? For the past year, VIX established the $21 as its new support level. Can the current bull run of US stocks make sure VIX support at $21 can be broken? Or are we at the edge of an explosive VIX movement?
2. With COVID still affecting the lives, can VIX go back to the good old $12.4 support level?
I would say no. There is no chance VIX going past $15 and I sincerely doubt it will go past $18. You have a golden opportunity to buy VIX at an extremely bargain price. Both the risk/reward and probability are in favour of you.
Forget Crypto, forget any hot stocks, forget gold. I can't advise you to buy VIX now but I strongly suggest that you should do your own research and consider adding the VIX index to your portfolio.
VIX Futures Price Curve Vs. VIXSimple enough.
The market is showing extreme divergence between Futures contracts priced for next month, and Futures contracts priced for Q4.
This is the largest divergence seen within this Futures cycle.
My theory is that it could be indicative of a bottom in VIX and the market pricing for more serious volatility events later in the year.
Key:
Bolder, lighter lines: Near-term
Finer, darker lines: Longer-term
This utilized VIX futures priced between next month and November.
The Great(er) Vix Play (again)Hello :)
It feels good to be back. For those of you who know/remember, I used to be a fairly active member on WSB as ScarvesandSuspenders. I left because i took alot of harassment for my trade ideas (whether they worked or didn't). Took a long hiatus to re-evaluate how i would like to interact with the trading community.
In short, I am back (here)! Not returning to WSB (yet), but feel free to share my ideas if you so please. As always, this is not financial advice and simply my personal view on what i see in the market.
This chart summarizes my current idea on VX futures and essentially the volatility market as a whole. When this will occur is all unknown but i believe at some point in 2021 is a fair assumption. I have begun accumulating my position and will continue to do so into the future.
Wishing you all a lovely day and a brighter 2021 full of possibilities.
Please stay safe and be careful.
Till next time!
S+S
