Playing ther VIX: Phenomenal Opportunity

Greetings all!

I've been researching VIX options recently and I believe that for anyone who is of the opinion that a P3 drop is likely within the next several months VIX options offer unparallelled leverage with several advantages:

FIrst a little background: VIX options are based on VIX futures, not the daily VIX quote. VIX options are Europen style - they can only be exercised on expiration day, which is the Wednesday preceeding the usual Friday OPEX.

The VIX is calculated by CBOE, and measures the implied volatility of the S&P 500 by a variety of measures: the technical aslects are not as important as the implications and uses of VIX: It is called the 'Fear Index' as it rises, often violently when fear (as seen when markets tank) rises.

Look at the last week: a mere 5% drop spiked the VIX up over 30. Now look back to last Oct - Feb: Wicked spikes and high closes:


Historical Closes:

08 Sept: 31
08 Oct: 63
08 Nov: 67
08 Dec: 51
09 Jan: 49
09 Feb: 48

The beautiful thing about the VIX is that it doesn't matter if the underlying S&P tanks starting at 1200 or 1000, VIX WILL shoot up and retain a high level for months when the real P3 shows up.

Now look at the leverage that Dec and Jan 40 45 and 50-60 call spreads offer! 20:1 and 50:1 Where else can you get that kind of leverage WITHOUT having to pick your entry point?

Even in-the-money spreads offer 2:1 retuerns, and does anyone believe that January will have LESS volatility that what we have seen in the last several weeks?

My plan is to build a substantial position in Jan VIX spreads over the next several weeks. With any luck there will be a rally to year's end which will make January and February VIX calls all the more cheaper and the market all the more volatile.

Happy Trading!



P.S. I'm publically posting my $3000 into $1MM+ challenge: Today I purchased 100 Dec. SPY 115 calls @ .29 I will roll over all proceeds from this position into VIX spreads at 20:1 and 50:1 leverage. A rally to 1200 and then a nasty Jan/Feb = seven digits. Don't hate me if it hits...