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A Contrarian Thought: CBOE Volatility Index


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Above is a weekly CBOE VIX (volatility) price chart. The vertical lines display time cycle studies. The indexs most recent low reading is on the extreme of the last three decades. Option premiums have been steadily depressed. Investor funds of Volatility sensitive ETF are at record levels of 2.3 billion. These instruments are designed to appreciate in a bearish VIX environment. Algo run programs are extremely engaged in short premium strategies. The effect of this current mass mindset can be observed in multiple markets. Market moves in our opinion are highly correlated to investor psychology whether it is overly pessimistic or euphoric. Market extremes are not uncommonly seen in this landscape. It is our belief, as a measure of risk/reward , the opportunity will soon present itself for a contrarian play. Blended times cycles suggest a possible change of course around mid to late December. Please contact us at Walsh for further insights addressing our recommended strategies to capitalize on this development.

John Lunney

Senior Technical Analyst

Walsh Trading

312 878 2391

888 391 7894 toll free

312 256 0109 fax

jlunney@walshtrading.com

www.walshtrading.com

Walsh Trading

53 W Jackson Suite 750

Chicago, Il 60604

Walsh Trading, Inc. is registered as an Independent Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (WTI) shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.



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About the author


John Lunney began his trading career in 1989 as a clerk for IFO, the largest futures and futures options brokerage on the CME floor. Within one year, John was promoted to an executing floor broker responsible for handling large individual and institutional accounts. John’s knowledge of option theory and tactics quickly attracted a growing customer base. In 2000, John began exclusively trading futures and futures options for his own account. John later became a founding member of VI Capital, a proprietary trading company funded with personal and investor funds. At VI Capital, John was the director of risk management, technical analysis and strategy development. VI Capital realized multi digit returns over the course of 8 years of trading.

John has extensive trading experience in stock indexes, metals, commodities, energy and agriculture products. He believes that hard work reveals the best trading opportunities, and strong discipline creates consistent results. John possesses a unique ability to connect with customers, understand their goals, and work with them to create long and profitable relationships.

Contact John
Phone: 312-957-8108 or 888-391-7894
Email: jlunney@walshtrading.com

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