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Strategies When VIX is Under 10

Best Practices

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Tom and Tony discuss tastytrade strategies when the VIX is below 10. They cover a range of strategies from conservative to aggressive for Low IV environments.

Strategies:
Long Time Spread (Calendar Spread or Diagonal Spread):
  • Vega is higher in the longer expiration cycle; thus this strategy benefits from increasing IV
  • Time Spreads can be constructed with a directional Bias
Long Debit Spread Long Volatility Product
  • Highest potential reward along with greatest potential risk (aggressive strategy)
  • The mean-reverting nature of IV means long IV strategies require quicker management
  • Some VIX products include: VIX, VXX, UVXY

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