Major players are buying puts. Why?

Consider the VVIX

August 08, 2024

We haven’t seen this since the-pandemic-that-shall-not-be-named.

My trading partner Taiku pointed something out to me Tuesday that really opened my eyes to what’s going on in the markets.

Yeah, we had a big sell-off earlier this week and the VIX spiked.

But that’s not the real story… the VIX gradually went back down again, we’re seeing things stabilize and recover (though it’ll take a while).

The real story, based on what Taiku showed me, is the VVIX (the measurement of the volatility of the VIX).

Look at this chart:

On the right side, you can see - that is HIGH.

When you go back in the history of the VVIX, the last time it got that high was… March 2020.

Uh oh.

We all remember March 2020, don’t we?

So, what does this tell us?

This means the pros are hedging their long positions with puts, and lots of them.  

Why would they do this all of a sudden?

What do they know?

Could it be that they expect an earthquake in the markets in the near future? It certainly seems that way.

That doesn’t mean we run from the markets.

It means we pivot our strategy!

For all the bloodletting that’s happened this week, Taiku had another blockbuster trading day Tuesday.

Here’s his summary:

In trading today, my heavy emphasis on short positions gave me a very profitable day!!  I closed out JEF puts, FDX and ROST put spreads, and the bear call SPY spread left over from the gamma condor win Friday in the SPY.  The KO puts behaved beautifully.

That’s another day with 5 solid trading wins on his plate.

To me, it’s not about all the put trades he’s making. That’s to be expected right now.

It’s the short positions.

There’s plenty of winning trades to be made in the market, but with volatility being what it is, our job as traders is to get in and get out with as much profit as we can, as fast as we can.

This might be an adjustment for some of you.

Five trades in a day is a lot.

(And that doesn’t include the ones he set up and didn’t close out yet!)

But - Taiku didn’t make these trades privately.

It’s what we do.

We don’t make trades in secret.

Taiku and I both like to share the trades we’re making in the Alpha Chamber, along with the results when we close them out, so that you can learn from our trades as we go.

And if it fits your trading plan and you’re comfortable with it, you’re free to make the same trades right alongside us.

Shoot, several times a week I’m live in there myself, reviewing trades, answering questions, and running as much analysis on the market as I can.

It’s why we created the Alpha Chamber in the first place: to provide a space where you can keep up with our live daily trades (especially Taiku’s, since he is such an active trader!).

If your focus is on shorter positions in this historically-volatile market…

…and you want as much trading education as possible to make the best trades you can…

…the Alpha Chamber is where you need to be.

How do you get access to it?

(As well as Jeff’s famous Bullseye Pick of the Week!)

Act now to be part of an active group of traders sharing their wins AND losses live every day - so you can master short trades faster!

See you on the inside.

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