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Yes. It is called trading volatility. I'm short puts and short SLV as of last Thursday. That bet is not on price direction, but in a decrease in how fast it moves (Close to Close) and therefore IV/option prices.
You could naked short vol as well but I learned more than I wanted to about the risks of being naked short vol in October 2008 .
I'll post some charts later.
Can you help answer these questions from other members on NexusFi?
Yes, its a bull market, (you're not missing anything) i'm just referring to the pull-back. Its a downtrend from a 1,577, a high to a low that took out a previous low, but we don't have a higher-high (yet). Added to that, commodities are softening over-all, the dollar is holding. So the jury's out on whether gold has finished it's correction. If not, look out below. Anything can happen and probably will. Its one bet.
adding: this discussion is actually about silver, just mentioning, in case anyone stumbles upon it.
Here you go. If you sold JUN 42 SLV PUTS last Thursday and covered yesterday you would have done well, even after the cost of hedging.
My SLV vol trade is still on so I won't go into details, but my view is that volatility will continue to drop in that instrument. Silver/SLV prices may go up or down, just not as fast as last week.
I wouldn't short gold today on that chart. I wouldn't go long either, that's my point i guess. Its a simple thing i'm saying, i wouldn't be going long silver until gold fully works out its correction. If you think gold has finished correcting by reading that chart, i'll take it under advisement. In fact, it could be that wasn't even a correction, just a normal swing in a trading range.
I don't know wtf I'm usually talking about either. Look at the Blue Line in these charts. That's IV. When it gets silly high I sell it, normally on EEM but EFA has worked for me as well thanks to the lads in Athens and Lisbon.
SPY is in there for comparison.
You can trade that Blue Line. The only reason I'm in this thread is because IV on Silver (be it futures or SLV) is silly high now. I don't have a view on where the price of Silver is going, I do have a view on how fast it will get there.
I'll consider a seperate thread on vol once I'm out of the Silver vol trade.
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