Monday, August 13, 2007

VIX hammer

Regarding my little WMIH trade, looks like the 37.50s were the place to be, not the 40s. Nevertheless, that was a good 3 day play and I will close the trade, wait for WM to rebound some, and then probably sell the 37.50s. The financials are getting slammed again......
The big breakout this AM turned out to to be a bust and I sold ATM Sept. calls twice as the Qs approached 47.80. Seems like I'm in good company as Clueless found a similar trade attractive. The Qs finished with a short doji, and although up for the day, are not looking all that cheery on the lowest volume in 2 weeks.
My consideration that the Qs might actually get back to the 49 line is based on the VIX, which has now retreated from wildly overbought territory to just overbought. While my first reaction is to play a return to the 10DSMA within a day or 2, the VIX has been like a cobra in the bag lately ... every time you think things have quieted down and look in the bag, it spits in your eye.
Based on the newly resolving BB pattern I am inclined to think that 20 might be the new 10 for some time to come (when and if it ever gets down to that level). As always, caution is advised. Check the Vix and More sidebar on the right for typical expiration week dynamics, although this doesn't quite qualify as a "typical week"

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