Sunday, May 9, 2010

Sentiment Indicators

I copied these from an IWO video so you might have already seen them. Before the recent crash I followed the logic on his thesis that HV was due to mean revert. Following these indicators is still a bit new to me so that's all I was doing, just following along. I'm pretty sure you mentioned the other to me recently about the number of stocks above their 50-day. I'll continue to follow along going forward and see if I want to incorporate these indicators going forward. What I like about them is they are obviously leading indicators that allow you to act ahead of time at a cheaper price, should you decide to act. Buying put protection now makes a lot less sense than had you tried to front run a possible mean reversion.

I've only got two trade ideas I'm interested in looking at on Monday. One is selling an OTM VIX call spread. I'll take the risk that we close under 40 by May expiration. The other is I'm going to price out some calendar spreads on a few stocks to also try and capitalize off the high volatility.

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