Ok lets get it straight. This current broad market selloff has nothing to do with the Gigantic, extra stellar IPO of AliBaba.
All one has to do is look at the VOL indexes of the major markets and this predication was actually simple for us. Look at RVX, VIX and VXN on a weekly chart. And if you didn’t see this selloff coming, well………..
What does a magic carpet do? It starts flat on the ground, you climb aboard, say the magic words (ie. go long, because that what happened to the left of the chart) and it takes off.
Now the smooth spring uplifting warm current has given way to the October winds that can be erratic. However, October is a beautiful time of the year, especially when implied volatility goes up, up up.
With that in mind, how to we manage the magic carpet when the ill winds blow?
Diagonals and put debit spreads. They are easy to manage and adjust.
That’s what we have been doing for months. Check out our trading room.
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