VIX Reverses

  • December 21, 2000
  • Dave Landry

Once again, there were no covered options that set up.
Continue to remain patient until conditions improve. 

Insurance
(
$IUX.X |
Quote |
Chart |
News |
PowerRating) rallied to reverse
Wednesday’s sell-off. This action suggests that its longer-term uptrend remains
intact. Look for buying opportunities in calls and call spreads here.

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Consumer non-durables
(
$CMR.X |
Quote |
Chart |
News |
PowerRating)
looks poised to break out of a high level base. Look for buying
opportunities in calls and call spreads here.

src=”https://tradingmarkets.com/media/images/Landry2/cmr122100.gif” width=”470″ height=”320″>

The VIX
reversed after hitting new highs on Thursday (a). This suggests that the
potential exists for an implosion in volatility. Look for OEX option strategies
that seek to capitalize on this reversion to the mean. Be warned though, these
strategies may offer limited gains with the potential for unlimited losses. Make
sure you fully understand the risks involved and/or hedge your positions.

src=”https://tradingmarkets.com/media/images/Landry2/vix122100.gif” width=”470″ height=”320″>

Best of
luck with your trading on Friday!

P.S. Reminder:
Protective stops on every trade!