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Thursday, January 20, 2011

Time To Buy Volatility


- Fair Volatility Estimate indicator's value is 13, while mean implied volatility on SPY is 14.6. While SPY implied volatility is above FVE indicator's value, I believe one should be looking to buy options and buy volatility because FVE indicator has crossed above its moving average from low levels.
- I would also think that buying the Feb 128/125 put spread and selling Feb 132 call for under 0.30 would be a good trade to put on for a possible correction.
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