Slope of Hope Blog Posts
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I'm on holiday still this week, and again next week, but I've been checking the markets every day and posting a couple of charts on twitter most mornings. If you want to see those then my twitter handle is shjack666. I'm doing a quick post for Friday morning as the markets are again at a very interesting level and I have a proposal for how the next few weeks may unfold that I'd like to share.
A month of closes over 30 for the VIX
The VIX rose 2.82% on Thursday, closing at 34.32. Since the market meltdown of August 5th, it hasn't closed below 30 on any day. Something I've mentioned in previous posts, when the VIX was below 20 (e.g., this one) is that long investors ought to consider hedging when volatility is low, and hedging costs are relatively low as well. Since August 5th, that hasn't been the case.
The table below shows the costs, as of Thursday's close, of hedging a basket of stocks and ETFs against greater-than-20% declines over the next several months, using optimal puts (if there are any optional stocks or ETFs you'd like to see added for future updates, feel free to mention them). First, a reminder about what optimal puts mean in this context, and a step by step example of finding optimal puts for one of the ETFs listed below (GLD).