Courtesy of Read the Ticker
Many have made their fortunes selling volatility premium and then losing it, that is because they are running down the lit fuse and not understanding that eventually the strategy blows up.
In the chart below periods marked with A, B, C, D are periods of chasing yield which was so great the selling of option premium became vogue. Yes, this strategy worked for a while and ‘this time was different’ worked, until it didn’t.
Selling volatility work great during period gray A until the cycle ended at red A.
Selling volatility work great during period gray B until the cycle ended at red B.
Selling volatility work great during period gray C until the cycle ended at blue C.
Selling volatility work great during period gray D until the cycle ended at blue D.
The point is if you play the selling volatility game, know thy cycle. Cycles matter!. The dominate cycles below gave you plenty of time to go to side lines when risk became apparent.
NOW >>What is interesting is gray E, VIX is above 20, and the red cycle is rising with the blue cycle is pending a swing up which suggest we are in a pending crisis moment (deflation shock).
IDEA: Have cycles studies in you investing plans, mix them with sentiment and market fundamentals.
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Changes in the world is the source of all market moves, to catch and ride the change we believe a combination
of Gann Angles,
Cycles,
Wyckoff and
Ney logic
is the best way to ride the change, after all these methods have been used successfully for 70+ years.
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Investing Quote…
…”The average chart reader is apt to become obsessed with the notion that the dips and peaks and primary and secondary movements are all there is to stock speculation. If he pushes his confidence to it’s logical limit he is bound to go broke.”…
Jesse Livermore
..“It’s not what you own that will send you bust but what you owe.”..
Anon
..The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell”..
John Templeton
..“One must search through a maze of complex and contradictory details to get to the significant facts … Then he must be able to operate coldly, clearly, and skilfully on the basis of those facts.” The challenge for the successful speculator is “how to disentangle the cold hard facts from the rather warm feelings of the people dealing with the facts.” Moreover, “if you get all the facts, your judgment can be right; if you don’t get all the facts, it can’t be right”…
Bernard Baruch
..”Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected”..
George Soros
