Not prit-tay.
But the unicorns will be out crapping skittles on Wall Street today. It has probably been ordered.
Either all the sky is falling articles are correct, or this is a buying opportunity. But the VIX is only in the mid 30’s, which is elevated but not astronomical. So the strategy is long puts and long calls. In other words, buy volatility. In fact the best strategy maybe is bear put spread plus bull call spread, about 5% out of the money, maybe for July.
Here’s why: the market is under pressure because of multiple potential threats (euro collapse, isreal vs. turkey, n korea vs. s korea, jobs numbers bad, gulf oil spill). Any and all of those things could either spiral out of control or resolve without longterm damage. (Jobs numbers could be just a one shot bad number because of gulf layoffs, for example, or could be the start of another “dip”).
In any case, depending on which threats resolve and which spiral out of control, the market could go way up or way down. The double-spread strategy wins if it either goes way up or way down, but loses if it stays about the same or in a narrow window.
For me, it’s hard to imagine the market staying in a tight window here. It is either going way lower or way higher. Normally under those conditions the VIX would be much higher, in the 40s or 50s or even more. But VIX is just modestly above normal now.
Last week I already had bear put spreads in place, but now that the market has come down quite a bit I’m going to see if I can balance that with some bull call spreads, as long as the VIX remains low. It may go lower today because futures point higher, allowing you to set up the spreads for even less money.
prepare for a run up in equities...