Simultaneous $VIX “Spike Peak” Buy Signals (Preview)

By Lawrence G. McMillan

Early this week, a $VIX “spike peak” buy signal was issued when $VIX closed below 14.28 (more than 3.00 points from the intraday high of 17.28 set last Friday, August 11th).  The trading system that we have built around $VIX over the years calls for holding this position (i.e., being “long” the market) for 22 trading days, unless $VIX closes back above that intraday high (17.28, in this instance), in which case the position would be stopped out.  Over the years, this system has produced roughly 60% winners, with winning trades being about 1.5 times the size of losing trades.  Those are the statistics of a nicely profitable system.  

Now, just a few days later, $VIX is in “spiking mode” once again.  Recall that $VIX enters spiking mode when it closes more than 3.00 points higher over any 1-, 2-, or 3-day period. $VIX was up 3.81 yesterday (August 17th) alone.  This incidence of “spiking mode” has an intraday high of 15.77 for $VIX, so if $VIX were to turn downward from here and close below 12.77, another $VIX “spike peak” buy signal would have occurred, without the first one being stopped out.  This second one is what we call an “overlapping” (or simultaneous, or concurrent) $VIX “spike peak” buy signal...

This excerpt was taken from the 8/18/17 edition of The Option Strategist Newsletter. Read the full article by subscribing today.