Options Trading Ideas – 4.1.2020
VIX is very high right now and trading VXX and UVXY alone seem to be a pretty dangerous thing to do (at least from my own perspective). I decided to venture out and looked for some ideas that could also benefit from the higher VIX. In other words, I looked for ways to profit from the high VIX by selling Call or Put (or selling Call or Put spread).
Do you have any good options trading ideas to benefit from the high VIX? Please share it in the comment section below.
Table of Contents
1) Short Japanese Equities ETF
Reason
Covid-19 cases in Japan have been relatively lower compared to other counties despite the fact that it was one of the Asian counties that reported its first Covid-19 case relatively early on after the outbreak. There are different theories about why the cases are lower (cultural behavior, not testing enough people, hiding something because of the Olympics, etc).
Having lived in Tokyo many years ago, I understand how crowded it is and how it is so difficult to commute or go anywhere without getting in contact with other people. So it’s puzzling how the reported cases in Tokyo could be so much lower compared to a large city such as New York. Likely the worst is yet to come. Looking at how the US stock market reacted to the outbreak in the US, shorting EWJ seems to make sense.
Trade Execution
Looking at the weekly chart, 50 seems to be the resistance level.
Sell April expiration 50/49 bear call credit spread.
EWJ Weekly Chart
2) Long USO
Reason
Crude oil is at an all-time low thanks to the ongoing oil war. This idea is based more on technical analysis.
The weekly chart shows it is still in a declining trend but the weekly chart showing the divergence between the price and MoneyFlow / RSI oscillators.
Trade Execution
It likely won’t stay below $4 even if it goes below that in the short term.
Sell April expiration $4 strike naked Put. Expecting it to expire out of the money. Even getting assigned, expect USO price to go above $4 soon.
USO weekly chart
USO daily chart
My primary option trading strategies incorporate volatility and I am constantly experimenting with various trading strategies to improve my PNL.
I hold two Master’s degrees (MSc and MBA) with career experience as a cancer research scientist and a digital marketer.
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