Saturday, April 4, 2026 
The Volatility Index (VIX)
The Volatility Index (VIX) has continued its perilous plunge from the heights of its October summit. Why hasn’t it caught an outcropping yet? Perhaps it is because the Index is not reflecting the underlying stress in the market. The core reasons for this are tri-fold:
First, quant funds are selling index volatility and buying volatility in individual names, which has a masking effect.
Second, the season of quazi-investors reaching for returns by selling huge call positions is upon us.
Third, The FED and it’s media have been so successful in augmenting bank sentiment that they have procured a huge boost in their common equities. This has allowed billions upon billions of dollars to be raised in common stocks of banks. Consequently, the equity offerings that have been raised of late will need to be further diluted. The stress tests were rigged, and the adverse case scenarios were far too optimistic.
Where does this all lead? For my money, I continue to own size in Ten Year calls. I am also finding safe footing in select miners and precious metal names.
The crash of 2009 is mounting, but so too is my strategy. The Ten Year goes far, far higher. In spite of all government efforts and their media machine, I veer not from my position. There is a wild outlier push coming in Treasuries, and rates will go below 2%. The FED has skillfully driven the market higher, but their trade will unwind; and as it does, the (VIX) and Treasuries will soar. Very few will be prepared. Peak earnings require a slow, methodical trek—and patience is one of my gifts.
When the climb of this year is over and my gains reach their crest—multiplying exponentially—my musings will see a larger audience. It’s a little known fact of the market that one’s net worth equals one’s net voice. Do you hear me yet?
Peace
The VIX
Hi Mr. V.
What is the ticker for the 10 year calls you’re buying? what miners and precious metals do you own and would recommend?
thanks..keep it up!
Comment by A — May 20, 2009 @ 10:33 pm
I own calls in the ZN futures contract. You can also buy calls in symbol IEF, which moves in tandem with the ZN futures contract. HL and CDE are my favorite mining names.
Comment by Mr. Volatility — May 21, 2009 @ 6:08 am
So you really think the a crash in 2009 will be more severe than the one we had in 2008?
Comment by jason — May 21, 2009 @ 7:41 am
10 just jumped… rates at 3.3!!! and the market is down…can you explain this?
Comment by jason — May 21, 2009 @ 9:18 am
Not sure worse in terms of percentages. I do think the profit potential is larger this year.
Comment by Mr. Volatility — May 21, 2009 @ 9:50 am
There isn’t always correlation.
Comment by Mr. Volatility — May 21, 2009 @ 9:59 am
[...] the stress in the system intensifies, the case for being long treasuries [...]
Pingback by The Euro, Treasuries and Gold | Trade the Picture — June 1, 2009 @ 8:20 am
[...] documented here at Trade the Picture, the bank stress tests were rigged. Now, a congressional oversight report reveals that more rigorous tests are [...]
Pingback by Banks May Need New Stress Tests, Panel Says | Trade the Picture — June 9, 2009 @ 4:35 am
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