Sometimes the vix will be low, did you think it is a good idea to sell

Question and Answer – Forum › Category: strategy › Sometimes the vix will be low, did you think it is a good idea to sell
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Raghu Staff asked 5 years ago
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Raghu Staff answered 5 years ago

This requires a fundamental understanding of how VIX is calculated. I see VIX value as a measure of hype of an option, whether the option will increase NOW and sustain the value till expiry.
I prefer not to just go with VIX value. How high is high? 12, 15, 19 or 21?
If you follow SPOT, everything is factored in.
What matters more are –

  1. what is the SD at which you are writing an option
  2. Is it hedged? (Do you need a hedge?) or Maintained SL or SLM?
  3. The distance of your breakeven points from the current spot
  4. Is it a balanced trade? or just single leg