Month: June 2012

The market saw one of the worst sell-offs of 2012 yesterday. As we mentioned in our previous video, the VIX had fallen to about 17 by Wednesday, just at Ben Bernanke delivered the FOMC meeting press conference. (If you bought a Long Straddle at this level of the VIX, you did great – please see our previous video blog). Sure enough, the Fed didn’t give the market the fix it wanted – and coupled with some bad economic data on Thursday, the markets fell off a cliff. Adding to the woes, 16 global banks were downgraded by Moody’s, including the largest U.S. banks.

The Vix or the “Fear” Index dropped over 10% today. Of course, this is not surprising given that the much-watched Greek elections over the weekend were what the markets wanted. The markets did indeed dodge a bullet ! However, all is not well with Spain’s 10-year bonds spiking to over 7.1% today, and that has the European and U.S. markets worried. We are entering a low-VIX environment and this can produce a few great strategies over the next 6 to 12 weeks. In this video, we discuss some of these Options strategies.