There was money to be made today vix

[Hopperbin]

I still don't get this vix, can anyone define this for me?

[Hopperbin]

If vix goes up, what does it mean? If vix goes down what does it mean?

[Integrity_Farmer]

Wow, what underwriter would offer insurance for CC debt.

That would be a sure fire loser.

[Hopperbin]

Well Integrity Believable Trustworthy farmer, don't you get phone calls that want you to purchase insurance on your credit cards? Well just saying this link indicates that if you have purchased insurance that the provider may not even pay if you are in a claim position.

[sumdumguy]

Wow Hopper, should have been on the ball.

[TOM4CWB]

The Striking Price | SATURDAY, AUGUST 6, 2011 Vix Picks: Time for a Hedge Edge
By STEVEN M. SEARS | MORE ARTICLES BY AUTHOR

Given that the stock market may soon soar or perhaps plunge, investors who aren't yet hedged might consider a VIX play that would offer protection through the historically volatile month of September.

The wild rumpus has started. It is not yet over. The stock market may experience another sharp decline during the next few weeks, or it could surge higher.

That weasel-worded assessment of market conditions reflects the honest fact that it is impossible to know what investors will, on any given day, focus on, or react to. The full data set of issues influencing the market is dour, but sometimes the crowd focuses on just one issue that makes it very happy, or very sad. In short, no one knows what's going on. Everyone is reacting.

On Thursday, when the Dow Jones Industrial Average fell 512 points, news reports attributed the decline to investors' expectations that Friday's jobs report would be bad. Yet the report was better than expected. The Dow rose with great volatility, and fell with just as much vigor, which is why the Chicago Board Options Exchange's Volatility Index (VIX) may now be an unusually reliable leading indicator of future stock-market action.

When the stock market exhibits extreme volatility, risk managers at many funds often assume control of investment portfolios. The risk managers often buy options on the Standard & Poor's 500 Index, and the VIX, which many investors consider to be an S&P 500 index option on steroids. This helps make VIX, which until Thursday's decline seemed to be taking its cues from the stock market, a leading indicator of future stock market activity.

Few barometers are better measures of equity-market risk than VIX. The volatility index measures the implied volatility of Standard & Poor's 500 puts and calls. When VIX spikes—and it surged some 36% Thursday to a new 52-week closing high—it is a good sign of widespread investor fear. VIX options' trading patterns suggest investors are ready for VIX to surge even higher, which suggests stock prices have further to fall.

On Thursday, buying action in VIX August 30 calls and VIX August 32.50 calls ultimately presaged the day's sharp decline in the S&P 500 and rise in VIX. On Friday, VIX calls remained unusually active, indicating expectations that VIX would surge higher still.

Some investors in total bought more than 41,000 VIX October 42.50 calls—a huge number—in anticipation the fear gauge might rise. More than 41,000 calls traded, which would increase in value if VIX gained more than 10 points before October.

Last week, we recommended investors prepare for a sharp stock-market decline by buying VIX September 24 calls and selling VIX September 30 calls. At the time, VIX was at 21. Now, VIX is around 32 (see Striking Price, "Debt-Crisis Hedges," Aug. 1). The trade, which was modeled by Michael Schwartz, Oppenheimer & Co.'s chief options strategist, gained a cool 100% or so when VIX spiked Thursday and Friday. Investors can consider taking profits, or maintaining the position.

Investors who aren't yet hedged, and are interested in cost-effective portfolio protection, can consider buying the VIX September 32.50 call and selling the VIX September 37.50 call. When Schwartz modeled the trade, the VIX hedge cost less than $1 during Friday trading, and it provides protection through the bulk of September, which is historically the trading year's most volatile month. Why? All of the market's great crashes have occurred in October.

Stephen Solaka, managing partner of Belmont Capital, a Los Angeles money-management firm, advised clients to "collar" their portfolios with SPDR S&P 500 ETF Trust (SPY) options. When SPY was at 119.75, Solaka advised selling the SPY September 124 calls and buying the SPY September 113 puts to protect portfolios against further market declines.

In times like these, the hedge is your edge.

“ It's not the debt ceiling debate that's spooking the markets. It's the fact Congress is wasting so much time on this issue when it's just a side show to the main act; ie, reforming regulations and the tax code to promote growth. The debt ceiling debate just reinforces how dysfunctional and divided our government and how very difficult that more important debate will be. ”

.— Cathy leow
On A Fool's Battle
http://online.barrons.com/article/SB50001424052702303697804576482431380342672.html?m od=BOL_hpp_dc

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