Volatility

Today I will be taking profits on my short puts that I set about a week ago.

In my opinion I think that volatility levels are now back at the bottom of the range. Now is the time to start adding to a long vega positions. I set $RUT calendar spreads yesterday to get some vega exposure. Now the $VIX is at about $22.10 and price could get as low as 20 again and that is alright, but if you want to start looking at long vega positions now is a great time.

There are a few other things that make me feel vol could pop over the next week. The first is the dollar, the greenback is closing in on the bottom of the wedge pattern. The closer the dollar gets to that level the higher the probability of going higher. Also the double top at 1100 is going to effect the vol levels as people will start to buy protective puts just in case we sell off from 1100. With 1100 in the cross hairs the anticipation of a pullback is ever growing.

To recap: Bullish on volatility, slightly bullish to neutral on the dollar, and I think a slight pullback in equity is in order maybe to 1075-1080.