Loading ...You bring up a very interesting topic. As a former equity options trader, implied volatility was
an extremely important gauge, when trying to discern if an option was perceived to be
undervalued or overvalued.
But by looking at a 5 year chart of the VXX, I understand why one would think that
volatility is not important anymore. I don’t know if that’s because hedge funds somehow
continually short the VXX and VIX (knowing that the FED will continue to implement
measures to perpetuate sky high values in the stock market). And its an election year,
so volatility will be completely squelched to maintain the perception that all is well.
I looked at the out of the money call options on VXX to try and get a sense as to how value
is perceived. You can buy a March 15, 2024 20 strike call on the VXX for just over $1. Sure that’s
some 25% out of the money, but if an imminent downside move is in the cards ( as many claim),
it’s certainly an affordable possible move that investors could make.