The dramatic decrease in volatility ($VIX is a good proxy for this) across the board over the past ten or so trading days is taking the starch out of my inclination for looking at delta-neutral options credit spreads. It’s getting harder to find good candidates. They are still out there, but I need to be more selective.
That said, I am open to getting long select names here. But the types of setups we’re more likely to find are ones where stocks come off nicely formed bases, rather than breaking out through key levels of resistance or all-time highs.
It doesn’t mean these setups are any more or less likely to work, it just requires a different mindset and tools.
Luckily the options market gives us a lot of tools.
I discuss this in today’s Options Jam Session, as well as a teachable lesson in a trade that got away from us:
