One of the ways to trade with Edge is to sell options when Volatility is higher than normal. On an index or an individual stock. The trade can work out better if you get more premium when you sell an option or spread. With that said, a $VIX that is on a tear up, can mean bad news for the put seller. One thing that I have learned is to wait for VIX to drop down or begin to stabilize before engaging your put selling tactic.
Let’s look at the VIX over the past two months. At the beginning of AUG 2019, the VIX was on a tear upward. Over the month, the VIX went up and down in an elevated place on the chart. You would get good premium, but the risk of the price going against you is higher. Now that September is here, the VIX looks to just be coming off the highs around 22.50 down to around 15. but elevated from the beginning of the month. A good time to initiate some selling of options.
We like to say here at the Options Edge, when Volatility is High it is better to be an options seller than an option buyer. (Premiums are Higher)
– Money.net
The first of the month, right after I review the Jobs Report, where unemployment was unchanged at 3.7%. I look at GDP and Inflation. For the first two quarters of the year, we had a change from 3.1 % to 2% according to the Bureau of Economic Analysis. This is a decrease in the rate of change of 1.1. The Bureau of Labor Statistics shows that CPI a measure of inflation, in June the inflation rate was .16 and in July it was l.8, an increase of .2
This shows that growth is slowing here in the U. S. and inflation or the cost to buy things is increasing slightly. Monetary policy should be constrained. September is the last month of the quarter so next month we will be watching the readings and revaluate.
Currently, Sectors that are outperforming are the Utilities, and Energy and REITs.
Happy Monday. Good Luck out there this week.
Global Spotlight
An Election Is Pushed Off, With More Brexit Drama to Come. In just three days, British Prime Minister Boris Johnson lost his majority in the House of Commons, Parliament approved a law forcing him to ask the European Union to delay Brexit if an exit agreement isn’t in place by Oct. 19 and Commons rejected his proposal for an early general election.
The ECB’s Return to Stimulus. Markets will be watching the European Central Bank (ECB) closely on Sept. 12 when new stimulus measures are likely to be announced. Most of the economic data coming from the eurozone since the ECB’s July meeting have been negative, inflation remains low and Germany still appears to be on the path to recession.
The Trade Truce Test. After the White House followed through with another tariff increase on Sept. 1, U.S. and Chinese negotiators agreed over a phone call to hold deputy working-level talks in mid-September and higher-level face-to-face talks in early October.
ndia May Be Able to Join Japan in Evading Trump Tariffs. According to an Inside U.S. Trade report, the Trump administration is considering drafting another “early harvest” trade agreement with India, as it has with Japan, to demonstrate that it can seal trade “victories.”
The Limits of a Concession in Hong Kong. As part of a four-point plan to quell Hong Kong’s three-month-long political crisis, Chief Executive Carrie Lam agreed to meet one of the protesters’ key demands and withdraw the extradition bill that sparked the unrest in the first place.
Things Aren’t Looking Great for an Iran-U.S. Breakthrough. French Finance Minister Bruno Le Maire went to Washington to try and win U.S. approval for an oil-backed $15 billion credit line to Iran in exchange for Iran returning to full compliance with the Joint Comprehensive Plan of Action (JCPOA) nuclear deal and lowering tensions in the Persian Gulf.
Low Ambition and High Contention in a Draft Afghan Deal. On Sept. 2, U.S. envoy Zalmay Khalilzad announced that the United States and Taliban had reached a draft agreement under which the United States would withdraw 5,000 troops from Afghanistan and close five bases over 135 days, while violence would reduce in the provinces of Kabul and Parwan.
Stratfor.com
Economic Calendar
Briefing.com has a good U.S. economic calendar for the week. Here are the main U.S. releases.
Briefing.com
Last Weeks Numbers
Review Last weeks numbers here.
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