Trading The Vix Index

It’s Still the Economy, Stupid

Fed Chairman Ben Bernanke has stated that much depends on the depth of US housing declines from here, and in the UK Gordon Brown has said that the Government will do everything in their power to help homeowners. Prior to the MPCs quarter point rate cut last week, Brown went as far as saying that the Bank of England can afford to cut rates because the UK has low inflation. With oil around $109, low inflation might be gilding the lily somewhat, but Brown knows and fears that a plummeting UK housing market could have a dramatic impact on the wider economy.

Last week it was revealed that some mortgage companies actually put up their rates following the Bank of Englands rate cut. It was a further blow for consumers when it was announced that UK mortgage approvals were down 3.5% on the previous month, and to make matters worse house prices experienced their biggest monthly fall since 1992.The two factors are of course inextricably linked. Many, including chancellor Alistair Darling have argued that the UK wont follow the US with a housing slump. It is not just politicians who are be hoping the optimists are right.

Friday got off to a bad start and got worse as the day progressed. European equities were stagnant until the news of General Electrics earnings miss hit the wires. Almost immediately, the FTSE crashed 100 points with the DAX and CAC falling even further in percentage terms. GE was at one stage the worlds largest company by market capitalisation, and due to the fact it earns most of its revenue outside of the US, it is often seen as a bellwether for the global economy. US markets opened down on the news and were driven down lower with the release of the Michigan Consumer Sentiment Survey and inflation data, which showed the worst readings since 1982 and 1900 respectively.

Next week starts with UK PPI data on Monday, and the RICS house price balance around midnight. Tuesday starts with more UK inflation data, with CPI figures in the morning followed by US PPI and Empire State Business Conditions Index around midday. Average UK Earnings and bonus data arrives on Wednesday morning followed by US core CPI around lunchtime. US Unemployment Claims come in on Thursday with Friday being a relatively light day on the data front.

At one point last week the Nasdaq recorded its lowest volume for over a year and the VIX volatility index dropped to its lowest level since February. Low readings of the VIX can indicate complacency in the market and Fridays rout could be an indication that this was the case. As it is, Fridays sell off has hardly moved the VIX from its recent low and next week earnings season starts in earnest. There may therefore be some value in a volatility trade next week. Try an Up or down trade with BetOnMarkets.com, it will pays out if either of two triggers are hit. An up or down trade on the Nasdaq Composite with the triggers set as 2200 and 2400 could return 20% over the next 16 days.

About the Author

Name: Mike Wright

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URL: http://www.betonmarkets.com & http://www.betonmarkets.co.uk

Trading VIX Derivatives: Trading and Hedging Strategies Using VIX Futures, Options, and Exchange Traded Notes (Wiley Trading) $40.72 A guide to using the VIX to forecast and trade marketsKnown as the fear index, the VIX provides a snapshot of expectations about future stock market volatility and generally moves inversely to the overall stock market. Trading VIX Derivatives will show you how to use the Chicago Board Options Exchange’s S&P 500 volatility index to gauge fear and greed in the market, use market volatility to your a…

Trading VIX Derivatives by Rhoads, Russell Edition ILL, 1 $25.99 A guide to using the VIX to forecast and trade marketsKnown as the fear index, the VIX provides a snapshot of expectations about future stock market volatility and generally moves inversely to the overall stock market. Trading VIX Derivatives will show you how to use the Chicago Board Options Exchange’s S&P 500 volatility index to gauge fear and greed in the market, use market volatility to your advantage, and hedge stock portfolios. Engaging and informative, this book skillfully explains the mechanics and strategies associated with trading VIX options, futures, exchange traded notes, and options on exchange traded notes. Many market participants look at the VIX to help understand market sentiment and predict turning points. With a slew of VIX index trading products now available, traders can use a variety of strategies to speculate outright on the direction of market volatility, but they can also utilize these products in conjunction with other instruments to create spread trades or hedge their overall risk.Reviews how to use the VIX to forecast market turning points, as well as reveals what it takes to implement trading strategies using VIX options, futures, and ETNsAccessible to active individual traders, but sufficiently sophisticated for professional tradersOffers insights on how volatility-based strategies can be used to provide diversification and enhance returnsWritten by Russell Rhoads, a top instructor at the CBOE’s Options Institute, this book reflects on the wide range of uses associated with the VIX and will interest anyone looking for profitable new forecasting and trading techniques.

Options Volatility Trading: Strategies for Profiting from Market Swings by Warner, Adam Edition ILL, 1 $42.99 1. VIX and the Art of Position Maintenance 2. And So, My Friends, I Bequeath Unto You, an Index that Will Quantify this Thing You Refer to as Volatility 3. Big Vixin’: Can You Compare Volatility Across Eras? 4. Behind the VIX Curtain: How Do Actual Traders Analyze Volatility? 5. Like the Weather: The Trading VIX and Why It Doesn’t Work Like You Think 6. Up In Smoke? Can Buying High and Selling Low in Volatility Actually Be a Great Idea? 7. Smile Like You Mean It 8. Time On My Side 9. Ultra Shares: Double Your Way Down to Zero 10. Guilt by Coincidental Association: The Plus Tick Rule 11. Ratio Ratio 12. Conclusion

Psychology of Trading $39.84 SUPERANNO This book will help readers find their best trading mindset. This anthology explores managing mind games, controlling emotions, behavioral economics, and the internal workings of the trading brain. Learn from the leading authorities on trading psychology. Discover the hard science behind economic decision making and how brain function contributes to trading decisions to give traders an edge in their trading practices. Includes graphs to better illustrate concepts, complete index, and glossary.

The Index Trading Course $48.75 This book is in New – Excellent condition

The Volatility Edge in Options Trading by Augen, Jeff Edition ILL, 1 $28.49  “Jeff’s analysis is unique, at least among academic derivatives textbooks. I would definitely use this material in my derivatives class, as I believe students would benefit from analyzing the many dimensions of Jeff’s trading strategies. I especially found the material on trading the earnings cycle and discussion of how to insure against price jumps at known events very worthwhile.” —DR. ROBERT JENNINGS, Professor of Finance, Indiana University Kelley School of Business   “This is not just another book about options trading. The author shares a plethora of knowledge based on 20 years of trading experience and study of the financial markets. Jeff explains the myriad of complexities about options in a manner that is insightful and easy to understand. Given the growth in the options and derivatives markets over the past five years, this book is required reading for any serious investor or anyone in the financial service industries.” —MICHAEL P. O’HARE, Head of Mergers & Acquisitions, Oppenheimer & Co. Inc.   “Those in the know will find this book to be an excellent resource and practical guide with exciting new insights into investing and hedging with options.” —JIM MEYER, Managing Director, Sasqua Field Capital Partners LLC   “Jeff has focused everything I knew about options pricing and more through a hyper-insightful lens! This book provides a unique and practical perspective about options trading that should be required reading for professional and individual investors.” —ARTHUR TISI, Founder and CEO, EXA Infosystems; private investor and options trader   In The Volatility Edge in Options Trading, leading options trader Jeff Augen introduces breakthrough strategies for identifying subtle price distortions that arise from changes in market volatility. Drawing on more than a decade of never-before-published research, Augen provides new analytical techniques that every experienced options trader can use to study historical price changes, mitigate risk, limit market exposure, and structure mathematically sound high-return options positions. Augen bridges the gap between pricing theory mathematics and market realities, covering topics addressed in no other options trading book. He introduces new ways to exploit the rising volatility that precedes earnings releases; trade the monthly options expiration cycle; leverage put:call price parity disruptions; understand weekend and month-end effects on bid-ask spreads; and use options on the CBOE Volatility Index (VIX) as a portfolio hedge. Unlike conventional guides, The Volatility Edge in Options Trading doesn’t rely on oversimplified positional analyses: it fully reflects ongoing changes in the prices of underlying securities, market volatility, and time decay. What’s more, Augen shows how to build your own customized analytical toolset using low-cost desktop s

Mastering Technical Analysis $34.95 Used – “Mastering Technical Analysis explores a wide range of technical analysis tools, detailing how to use each to improve trading performance. Topics explored include moving averages and the importance of crossovers; popular indicators from the VIX index and 10-30 DMA to stochastics; trends and pattern recognition; and more. In addition, this book examines how exchange-traded funds and other new securities as well as the emergence of China, India, and other international markets will impact p

Mastering Technical Analysis $99.83 New – “Mastering Technical Analysis explores a wide range of technical analysis tools, detailing how to use each to improve trading performance. Topics explored include moving averages and the importance of crossovers; popular indicators from the VIX index and 10-30 DMA to stochastics; trends and pattern recognition; and more. In addition, this book examines how exchange-traded funds and other new securities as well as the emergence of China, India, and other international markets will impact pr

Options Volatility Trading: Strategies for Profiting from Market Swings $24.38 New – Options Volatility Trading educates novice to intermediate investors on the nuances of the volatility index (VIX), the psychology behind it, and the best strategies to employ during dramatic market shifts. It provides a solid grounding in historical volatility patterns, distortions created by market noise, and how to use tools other than VIX.

Options Volatility Trading: Strategies for Profiting from Market Swings $23.92 Used – Options Volatility Trading educates novice to intermediate investors on the nuances of the volatility index (VIX), the psychology behind it, and the best strategies to employ during dramatic market shifts. It provides a solid grounding in historical volatility patterns, distortions created by market noise, and how to use tools other than VIX.