VIX (the CBOE volatility index) data going back to January 2007.

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VIX Graphs

The Data

Below is the graph (data beginning Jan 2007), hopefully updated weekly. ( Last update: Sep 25, 2009.)

What we can learn from the data.

VIX has been trending slowly lower over the past few weeks, as the market has been marching higher. But, even as the market pushes its way ever higher, VIX is going nowhere. It may be summer, but we'e seen a very strong rally. The put sellers have been winning lately and it's been more difficult for the iron condor buyers - unless insurance was owned. I feel the need to own that 'just in case' protection. And it's been necessary to own those calls. Good trading to everyone!

VIX hasn't been this low for awhile, but I feel the need to remind you that it's still at a high level when one looks at the entire 21 year history of the VIX.

Wasn't it just a few months ago that VIX reached 80? Difficult to believe. OK, it's more than just a few months ago, but the memories remain

And wasn't just a couple of years ago that 30 was considered to be extremely high as VIX was below 10 (Jan 2007).

We recently broke under 30 - the first time in 170 trading days. What's next? Unless this market heads south in a big way, it's not likely that VIX will be soaring past 30 - at least not immediately

We, as option traders, must recognize that our favorite methods will not work forever. I currently prefer buying iron condors, with added insurance, as described in Chapter 20 of the Rookie's Guide to Options, and hope to use that strategy for a long time. But unidirectional markets are unsuitable for iron condor traders. What I know for certain is that buying insurance has been necessary. On the other hand, low volatility environments provide lower premium for iron condor buyers and it makes insurance relatively inexpensice. It's alwaays a personal comfort zone decision to know how much insurance, if any, to buy.

Now that I own all that insurance, it will probably prove to be unnecessary. But right now I'm more concerned with protecting my assets than I am with the prospect of having a big month. Slow and steady - at least for now - is my mantra.